The US dollar took off on Tuesday morning, clobbering the Japanese yen, after the Trump administration said it would delay 10% tariffs on some Chinese products scheduled to begin next month, a significant concession in the trade conflict between Washington and Beijing. The US Trade Representative said it would delay tariffs on laptops and cellphones, among other products, set to be imposed in September.
The US dollar rose 1.49% to 106.85 Japanese yen per dollar. The yen is a safe-haven asset which benefits in moments of geopolitical uncertainty and during economic downturns. The US-China trade war had begun to affect economic growth in the United States and raise fears that the conflict could lead to a recession. Other safe havens like Treasury bonds also saw prices fall as investors moved money into riskier assets. The dollar index was 0.38% higher at 97.749, and the offshore Chinese yuan was 1.38% stronger at 7.0050.
Financial markets have fully priced in an interest rate cut in September. Expectations that rates will be cut by 25 basis points rose to 92.7% from 84.6% a day prior as fewer traders bet on a more dramatic 50-basis-point cut next month.
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