Yen, Swiss Franc Rally as Traders Seek Havens on Tariff Defiance

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Yen, Swiss Franc Rally as Traders Seek Havens on Tariff Defiance.

foreign exchange :: 5hrs ago :: source - bloomberg

By Matthew Burgess

(Bloomberg) -- The yen and Swiss franc strengthened Monday as traders sought havens after US officials expressed their defiance over trade tariffs and indicated negotiations for any tariff reductions will be prolonged.

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The Japanese currency climbed 1% to 145.41 per dollar and the Swiss franc climbed 0.7% as risk-off sentiment extended into a second week. The Australian dollar slumped 0.7%, leading declines among major developed market currencies.

The flight to safety is extending after US officials at the weekend gave little indication President Donald Trump is willing to back down on the reciprocal tariffs that were imposed last week. Treasury Secretary Bessent said trade issues can’t be negotiated away in a matter of days or weeks.

S&P 500 futures slumped in early Asia trading and their Treasury equivalents climbed.

“If Trump keeps the hard line we will take more hits on risk,” said Nick Twidale, chief analyst at AT Global Markets in Sydney. “Deals taking months is not a good thing for global trade and probably not what investors expect from this administration which has pulled back swiftly on tariffs in recent months”

Investors are rushing to haven assets as the deepening trade war between US and its partners leads to fears of a global slowdown and stagflation in the world’s biggest economy. China’s retaliation against American duties on Friday caused currency and equity volatility to soar, with US shares slumping the most since March 2020.

Australian assets were among the worst hit as the small, open economy is dependent upon its trade linkages. The Aussie fell the most since Oct. 2008 while Australian stocks slumped.

“Both President Trump and Treasury Secretary Bessent seem unnerved by the reaction in markets, and the markets will look to test their resolve this week,” said Chris Weston, head of research at Pepperstone Group in Melbourne.

(Updates with more context)