LONDON (Reuters) – The euro weakened half a percent and other high-yielding currencies such as the Australian dollar wilted on Monday as rising concerns over an escalation in the trade dispute between the United States and its partners sapped demand.
The single currency also received a setback after German Chancellor Angela Merkel was dealt a fresh blow when her interior minister offered to quit in an escalating row over migration policy.
While economists expect the direct economic damage from those tariffs to be relatively contained, at least for now, many see the reversal of globalization having negative repercussions for years to come, lowering companies’ longer-term growth expectations.
Chinese stock markets fell 2.5 percent while its currency sank to more than seven-month lows CNY=CFXS as investor concerns grew about a widening trade conflict.
The dollar extended its gains against the yen to hit a fresh six-week high of 111.06 yen JPY=EBS.
The Japanese currency was unmoved by the Bank of Japan’s tankan business sentiment survey, which showed a slight dip in big Japanese manufacturers’ sentiment.
The Australian dollar AUD=D3 weakened 0.5 percent against the greenback while the Canadian dollar CAD=D3 slipped 0.3 percent.
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