The dollar traded slightly lower on Tuesday morning in Asia amid the escalating trade tensions between the U.S. and China. Risk aversion resulted from fears of a full-blown trade war between the world’s two largest economies sent the safe-haven yen higher. The Non-Farm Payrolls results are also investors’ focus this week.
The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 89.66 at 11:27PM ET (03:27 GMT), down 0.03%, extending its losses from an overnight high at 89.78.
In response to U.S. tariffs on imported steel and aluminium, China imposed retaliatory tariffs on U.S. imports, with extra tariffs of up to 25% on 128 U.S. products including frozen pork, wine and certain fruits and nuts. A U.S. manufacturing activity report for March showed new orders slowed amid trade disputes between the two countries.
In China, The People’s Bank of China set the fix rate of yuan against the dollar at 6.2833 versus the previous day’s 6.2764. The USD/CNY pair gained 0.20% to 6.2889.
The USD/JPY pair traded flat at 105.89. The yen saw wide uptick as the greenback dipped while equities and other risk assets tumbled on the post-holiday market action amid fading risk appetite. The pair dropped below the 106 range overnight to Tuesday’s low at 105.67 and traded around the the range on Tuesday morning.
The AUD/USD pair traded at 0.7679, up 0.22%. The market widely expected no hawkish tone from the Reserve Bank of Australia’s interest rate decision as the Bank is expected to keep the rate into next year.