The dollar rose near an 11-month high against the Chinese yuan and the Australian dollar tumbled after the U.S. said it would slap tariffs on an extra $200 billion of imports from China, sharply escalating tensions between the world's two biggest economies.
The news threw U.S.-China trade war worries back into the spotlight just days after Washington imposed 25 percent tariffs on $34 billion of Chinese imports, and Beijing responded immediately with matching tariffs on the same amount of U.S. exports to China.
The offshore Chinese yuan fell as low as 6.6918 per dollar , down more than 0.5 percent from late U.S. levels and edging near its 11-month low of 6.7344 touched on July 3.
The Australian dollar slipped 0.6 percent to $0.7417 from this week's high of $0.7484, which was its highest levels in more than three weeks.
"With the announcement from the U.S on the Chinese tariffs, the reaction on the policy side from China will be the key event to watch in the coming days," said Shinichiro Kadota, senior FX strategist for Barclays (LON:BARC) in Tokyo.
"If China does react with further escalation in tariffs, the U.S. equity market as well as the dollar-yen or Australian dollar could face further downward pressures," he said.
"Because Trump talked about the $500 billion figure, it was not a complete surprise. Yet markets will inevitably react to these types of news headlines," said Kyosuke Suzuki, director of forex at Societe Generale (PA:SOGN).
"Since the new tariffs won't be in place for two months, markets could soon calm down, although we will have to see how share markets, especially Chinese shares, will react to this," he said.
Reference: CNBC
Thai
Eng