Dollar under pressure, safe havens rise as Trump ups tariff ante over Greenland

SINGAPORE – The dollar fell on Monday and investors unnerved by US President Donald Trump’s latest tariff threats against Europe over Greenland piled into the safe-haven yen and Swiss franc, in a broad risk-averse move across markets.

Trump said over the weekend he would impose an additional 10% import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and Britain, until the United States is allowed to buy Greenland.

Major European Union states decried the tariff threats over Greenland as blackmail on Sunday, with France proposing to respond with a range of previously untested economic countermeasures.

In the foreign exchange market, the initial knee-jerk reaction in early Asia trade was to sell the euro EUR= and sterling, in a move that pushed them to a seven-week low and one-month trough of USD 1.1572 and USD 1.3321, respectively.

However, the two currencies bounced from their lows, and it was the dollar that came under pressure as the trading day got underway, as investors assessed the longer-term implications of Trump’s latest move on the greenback’s standing.

That helped the euro reverse its losses as it gained 0.17% to trade at USD 1.1618, while the British pound similarly recovered 0.1% to USD 1.3387.

“Typically you would think tariffs being threatened would lead to a weaker euro, but as we’ve seen last year as well, when the Liberation Day tariffs were getting put in place, the impact in FX markets actually has been more towards dollar weakness every time there is heightened policy uncertainty emanating from the US,” said Khoon Goh, head of Asia research at ANZ.

Investors had dumped the dollar in the wake of last April’s “Liberation Day” announcement when Trump unveiled sweeping tariffs on the world, triggering a crisis of confidence in US assets.

A similar trend played out on Monday, as the greenback slid 0.24% against the safe-haven Swiss franc to 0.7989, and was down 0.31% to 157.63 yen.

The dollar index was little changed at 99.17.

“While you would argue that the tariffs threaten Europe, in fact, it’s actually the dollar that is bearing the brunt of it, because I think markets are pricing in increased political risk premia on the US dollar,” said Goh.

Elsewhere, the risk-sensitive Australian dollar was down 0.12% to USD 0.6683, with its losses capped by the broad dollar weakness.

The New Zealand dollar rose 0.06% to USD 0.5755.

Cryptocurrencies, which are often used as a gauge of risk sentiment, were meanwhile sold off heavily.

Bitcoin was down nearly 3% to a one-week low of USD 92,501.38, while ether sank more than 4% to USD 3,185.98.

(Reporting by Rae Wee; Editing by Shri Navaratnam and Michael Perry)