The Japanese yen stood firm on Tuesday as markets fear escalating trade war between the U.S and China.
The dollar was trading at 105.96 yen on Tuesday falling steadily for three days in a row from highs of 107.00 yen on March 28. On Monday the S&P 500 fell 2.2 percent as technology shares fell over fresh concerns of a escalating trade war.
On Monday China announced that they were imposing additional tariffs on the imports of U.S. scrap aluminium and frozen pork of 25 percent and 15 percent on fresh and dried fruit, nuts, wine and ginseng. There will also be a rise in duties of 15 percent on rolled steel bars.
The escalating dispute between the two biggest economic powers in the world has supported the yen, which is seen as a safe haven by traders during volatile trading and times of uncertainty.
Fresh U.S. tariffs on Chinese goods is expected sometime this week by the Trump administration. In a tit for tat response the Chinese ambassador to the U.S. said on Tuesday that they would take counter-measures of the same proportion if more tariffs were imposed on Chinese goods.
Head of trading in Asia-Pacific, Stephen Innes for Oanda in Singapore said that right now with the fragile equity market, it is going to be choppy with trade of dollar/yen lower. He went on to say that unless there is an easing in the U.S- China trade tensions investors risk appetite is unlikely to recover quickly.
Focus Now on U.S. Data
Focus by investors is now on the non-farm payrolls report and other U.S. data on Friday which is expected to affect the outcome of any future Federal Reserve interest rate increases. Senior strategist at SMBC Nikko Securities in Tokyo, Makato Noji said that if the S&P 500 doesn’t stop its decline it could affect the Feds decision on the pace of the hikes.
The euro gained 0.05 percent to $1.2309.
The Australian dollar was up 0.35 percent at $0.7688 after the Reserve Bank of Australia decision to keep its cash rate at a record low 1.5 percent, which was expected.