Investors dampened risky assets and resorted to the safe havens on Monday on worries of global trade war and political uncertainty in Italy after a vote that resulted in a hung parliament.
Worries of trade war sparked on Friday after U.S. President Donald Trump announced plans to impose tariffs of 25% on imported steel, and 10% on aluminum “for “a long period of time.”
The European Union warned it could adopt a 25 percent tariff on about $3.5 billion of imports from the United States if Trump imposed his planned tariffs.
China said it will defend its interests against any trade restricting decisions from the United States.
In Italy, Sunday’s Parliamentary election vote results signaled the delivery of a hung Parliament, raising concerns about a political deadlock that could need several months to resolve.
Asian shares slumped while investors flocked to refuge assets such as yen, franc and gold.
The USDJPY extended its drop for a fifth straight session to 105.34 after hitting the lowest level in 16 months on Friday, noting that the pair opened today on a downside gap.
The euro dropped against the Swiss franc to 1.1510 after opening at 1.1537, while sagged to a seven-month low of 129.34 versus the yen.
Gold rebounded from a two-month low of $1302.78 an ounce last week to resume its advance for a second consecutive session to $1326.50.
China’s Caixin services PMI slowed to 54.2 in February from 54.7 in January, ahead of services reports from the euro area, U.K. and the U.S. later in the day.
The key events and data this week will be monetary decisions by the BOJ and ECB and the famous U.S. non-farm payrolls.
dollar index traded higher at 90.00, soaring for the first time in three