Reuters
The dollar fell against the yen and Swiss franc on Wednesday after China retaliated against the Trump administration's plan to slap tariffs on Chinese goods, proposing a list of similar duties on a wide range of U.S. imports.
In the midst of the U.S.-China trade tension, the dollar has weakened in four of the last five sessions against the yen, down nearly 6 percent so far this year. Against the Swiss franc, the greenback has fallen 1.6 percent so far in 2018.
The Japanese and Swiss currencies tend to appreciate in times of geopolitical and economic stress.
China on Wednesday proposed tariffs on U.S. imports including soybeans, planes, cars, beef and chemicals. The Chinese plan came hours after Washington unveiled a detailed breakdown of some 1,300 Chinese industrial, transport and medical goods that could be subject to 25 percent duties.
China's move is "a sign that Beijing is up to the fight and that if U.S. President Donald Trump wants to prove that trade wars are in fact easy to win, he'll have to back it up with actions," said Craig Erlam, senior market analyst at OANDA in London.
"Ultimately, the response we're seeing in the markets suggests investors are not on board with the actions being taken by both countries and see them as a real threat to what has been a good period of global growth," he added.
The Chinese news dominated the market, overshadowing a U.S. employment report by payrolls processor ADP which showed a higher-than-expected 241,000 private sector jobs created last month.
"Admittedly, the ADP survey is not a great leading indicator for payrolls, not least because it is partly based on lagged changes in payrolls," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
"Nevertheless, to the extent it is useful, it points to a labor market still in exceptionally good health."
In morning trading, the greenback slid 0.3 percent against the yen to 106.26 yen JPY=, and slipped 0.1 percent versus the Swiss franc to 0.9584 franc CHF=.
In the aftermath of the Chinese tariffs, the yuan on Wednesday suffered its biggest one-day loss versus the dollar since mid-February, down 0.6 percent at 6.3094 yuan per dollar.
The Chinese currency had been strengthening this year, fueling speculation on whether Beijing can intervene in markets to limit its rise.
