The trading day on Wednesday did not begin well for the American dollar. Despite the fact that the currency is well-supported by good fundamentals in the United States, right now the American stock markets are taking losses due to the uncertainty on the global financial markets. The latter was caused by none other than the American President himself, as Donald Trump announced he might hit China with more severe tariffs starting the day after tomorrow, in an attempt to pressure China into signing a trade agreement with the United States as soon as possible.
Moreover, the anti-risk sentiment is also caused by fears about the development and usage of nuclear weapons. North Korea has reportedly resumed missile testing, since Trump’s two summits with Kim Jong-un did not lead to any conclusive agreements. Iran, who had stopped enriching uranium as part of the Iran nuclear deal, announced that they will once again resume activities in their nuclear plant. Since Trump unilaterally canceled the Iran nuclear deal, the Middle-Eastern country has stated it would only honour its commitments if the other countries involved in the deal agree to continue allowing Iran to sell its oil without sanctions.
In the current environment we advise you to pay attention to the Japanese yen, investors’ safety asset of choice. The JPY has been steadily appreciating against the dollar for a few days and has pushed the USD/JPY to below 110.
