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

SINGAPORE — The dollar fell on Monday as investors, unnerved by U.S. President Donald Trump’s latest tariff threats against Europe over Greenland, moved into safe-haven currencies such as the yen and Swiss franc. The shift came amid a broader risk-averse mood across global markets.

Trump announced over the weekend that he would impose an additional 10% import tariff starting February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain. The tariff would remain in effect until the United States is allowed to purchase Greenland.

Major European Union nations condemned the tariff threats as a form of blackmail on Sunday. France suggested responding with a range of previously untested economic countermeasures.

In foreign exchange markets, the initial reaction during early Asia trading was a sell-off of the euro and sterling. This pushed the euro to a seven-week low and the pound to a one-month trough, trading at $1.1572 and $1.3321, respectively.

However, both currencies recovered from their lows as the trading day progressed. Investors reassessed the long-term impact of Trump’s move on the dollar’s global standing, which ultimately placed pressure on the greenback.

By mid-day, the euro had reversed losses, rising 0.17% to $1.1618, while the British pound recovered 0.1% to $1.3387.

“Typically, you would think tariff threats would lead to a weaker euro,” said Khoon Goh, head of Asia research at ANZ. “But as we saw last year during the Liberation Day tariffs, the impact in FX markets has been more toward dollar weakness every time there is heightened policy uncertainty from the U.S.”

Investors had previously dumped the dollar following Trump’s April “Liberation Day” announcement, which introduced sweeping tariffs and sparked a crisis of confidence in U.S. assets.

A similar trend emerged on Monday. The dollar slid 0.24% against the safe-haven Swiss franc to 0.7989, and fell 0.31% to 157.63 yen.

The dollar index was relatively unchanged at 99.17.

“While you might argue that the tariffs threaten Europe, it is actually the dollar bearing the brunt of it,” Goh added. “Markets are pricing in increased political risk premium on the U.S. dollar.”

Elsewhere, the risk-sensitive Australian dollar fell 0.12% to $0.6683, while its losses were capped by broader dollar weakness. The New Zealand dollar rose 0.06% to $0.5755.

Cryptocurrencies, often viewed as a gauge of risk sentiment, were sold off heavily. Bitcoin fell nearly 3% to a one-week low of $92,501.38, while Ether dropped more than 4% to $3,185.98. -Reporting by Rae WeeEditing by Shri Navaratnam and Michael Perry/Reuters