Fundamental Comment

Trump’s planned tariffs trigger risk-off mode

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Investors resorted to refuge currencies on Friday, led by the yen and franc, while dampened equities on worries after President Trump announced plans to impose tariffs on steel and aluminum.

The Japanese yen strengthened for a third straight session to $105.66, flirting with a 16-month high and set for a weekly advance.

The Swiss franc soared to $0.9376, where it continued to get support after hitting a bottom of $0.9490 the previous session.

European equities slipped, led by miners’ shares as the tariffs could weigh on commodities’ demand, trailing a more than 1 percent drop in Wall Street overnight.

Trump announced plans to impose tariffs of 25% on imported steel, and 10% on aluminum “for “a long period of time.”

Such a tariff could trigger a trade war that would slowdown global trade, adversely affect economic growth and raise costs.

Some analysts warned that the planned tariffs would spark a trade war with China, which could be the beginning of a global recession.

China’s ministry of Commerce expressed “grave concern” over US plans to impose tariffs on steel and aluminum.

U.S. 10-year treasury yield rose slightly to 2.815 percent, after dropping 1.9 percent on Thursday as worries enhanced demand on safe-haven bonds.

The dollar index retreated to 90.10, as it faced selling pressure after climbing to a peak of 90.87 the previous session.

“There is no evidence the economy is overheating,” Fed Chair Jerome Powell said in his second Congressional testimony on Thursday, saying he expects the Fed to stick with a “gradual” pace of monetary policy tightening.

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