The dollar remained lower against the yen on Wednesday after the U.S. and China took another step closer to a trade war that could deal a blow to the global economy.
USD/JPY was down 0.42% at 106.15 by 08:34 AM ET (12:34 GMT), not far from the day’s low of 105.98.
The Japanese yen, typically viewed as a safe-haven currency, tends to be sought out by investors during times of political or economic uncertainty.
Fears over the prospect of an all-out trade war escalated on Wednesday after China announced a fresh wave of tariffs on U.S. imports, in retaliation in retaliation to U.S. President Donald Trump’s new tariffs on its exports.
China’s commerce ministry announced reciprocal 25% tariffs on $50 billion of U.S. goods, including soybeans, planes and autos. The effective date will depend on when the U.S. action takes effect.
The move comes one day after the Trump administration pushed ahead with plans to slap tariffs on about $50 billion of annual imports from China in an attempt to force changes in Beijing’s intellectual property practices.
The dollar showed little reaction to data showing that the U.S. private sector added 241,000 jobs in March, well above economists forecasts.
The report comes ahead of the more comprehensive government nonfarm payrolls report, as well as comments by Federal Reserve Chairman Jerome Powell on Friday, which could help determine the direction of the dollar.
Signs of increasing wage growth could underline the case for the Fed to raise interest rates at a faster pace.
Expectations of rising rates tend to boost the dollar by making the currency more attractive to yield-seeking investors.
The euro was a touch higher against the dollar, with EUR/USD last at 1.2278 as investors stuck to the sidelines amid broad-based risk aversion.
In the euro zone, data on Wednesday showed that annual inflation picked up to 1.4% in March, keeping the European Central Bank on track to scale back its massive stimulus program in the coming months.
The pound was lower against the dollar, with GBP/USD sliding 0.17% to 1.4033.
Sterling came under pressure after a report on Wednesday showed that activity in the UK construction sector slowed sharply in March, hit by unseasonably cold weather.