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Dollar Flat as Trade-War Concerns Resurface to Lift Yen

8/9/2018, 1:42:57 PMMarket Analysis
Dollar Flat as Trade-War Concerns Resurface to Lift Yen

The dollar was flat against its rivals Wednesday, pressured by a stronger yen as trade-war fears resurfaced after China vowed to slap further tariffs on a raft of U.S. goods.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.01% to 95.01.

The Chinese Ministry of Commerce said it will impose a 25% charge on $16 billion worth of U.S. goods. The 333 goods targeted by China would include vehicles, crude oil and fiber optical cables.

The announcement from China comes after the Trump administration followed through with a 25% tariff on an additional $16 billion of Chinese goods Tuesday evening.

The latest volley of American and Chinese tariffs takes the total of targeted goods to $50 billion on each side and are slated to come into effect on Aug. 23.

That propped up demand for safe-haven yen and the Swiss franc against the greenback.

USD/JPY fell 0.37% to Y110.98, while USD/CHF fell 0.09% to 0.9946.

A slump in the pound to its lowest level in a year, amid fears of a no-deal Brexit, and renewed pressure on the yuan steadied the dollar.

GBP/USD fell 0.46% to $1.2880, while USD/CNH gained 0.18% to 6.8328.

The plunge in pound comes after U.K. International Trade Secretary Liam Fox said it was more likely than not that Brexit happened without a trade deal. The odds of Britain not securing a trade deal before leaving the EU were "certainly not much more than 60-40," Fox said.

EUR/USD fell 0.02% to $1.1596.

USD/CAD rose 0.13% to C$1.3070 as falling oil prices weakened the oil-price sensitive loonie, supporting on the pair.

Also weighing on the loonie were reports Saudi intuitions were considering selling Canadian assets amid the ongoing Saudi-Canada conflict.