On Thursday afternoon, the dollar fell against the yen after President Trump said he would impose a 10% tariff on $300 billion worth of Chinese imports from September 1.
Trump announced the news in a series of tweets he published after a U.S. delegation returned to the United States after concluding trade negotiations in Shanghai. He said that China had not fulfilled its commitment to buy large quantities of agricultural products from the United States, nor had it restricted the sale of synthetic opioid fentanyl.
The dollar fell 1.32% to 107.31 yen against the yen, with overnight markets hitting two-month highs. As traders withdraw riskier assets, the safe-haven yen rises. The dollar index fell 0.20% to 98.325 after Trump's comments.
Powell, chairman of the Federal Reserve, said Wednesday that the Federal Reserve cut interest rates by 25 basis points for the first time since the financial crisis was not the beginning of wider monetary easing. After that, the dollar index hit a two-year high.
"The interest rate market has fluctuated considerably, so the foreign exchange market will not be immune. But by contrast, the trend is slightly more orderly, except for the dollar/yen, but it certainly shows some synchronization, "said Mazen Issa, senior foreign exchange strategist at Dominican Securities.
The benchmark 10-year U.S. Treasury yield fell to its lowest 1.878% since November 2016, the first time in more than two years that it has fallen below the key technical level of 2%.
The reversal of the dollar's trend brought EUR = back to its rising range against the dollar, which had fallen to a 26-month low against the dollar after the Fed's comments helped drive the dollar up. Investors expect the European Central Bank (ECB) to take a more radical stance than the Federal Reserve in easing monetary policy, which will curb market interest in the euro. The euro rose 0.13% against the dollar in late New York trading to $1.1088.
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