On Thursday last week, the United States president announced that the US would officially start imposing tariffs on a number of Chinese goods valued at more than $50 billion. On Friday, China responded with its own list of tariffs which included the important crude oil and natural gas.
Yesterday, the US president announced that the government was preparing a set of additional tariffs worth more than $200 billion. In response, China announced similar tariffs. This opens a new trade war which has not been seen in decades.
The markets reacted by falling with the Dow shedding more than 200 points. Today, Asian stocks have lost more than 2% of value with Hong Kong’s Hang Seng falling by almost three percent.
The fear of a trade war has led to the increased demand of the so-called safe haven assets. As shown below, the Swiss Franc, Gold, and Japanese Yen have all gained against the dollar in the past few days.
Then USD/JPY is often regarded as a safe haven currency because of the vast foreign holdings Japan has. As the pair has fallen, it has crossed the important support of 110.2. The pair is also trading below the 21 and 42-simple moving average. As the trade issues continue to persist, there are chances that the pair will continue moving lower and possibly test the 110.9 level.