BUZZ-COMMENT-The dollar is Trump's Achilles heel

Feb 3 (Reuters) - The dollar is Donald Trump's Achilles heel as its strength, stemming from his plans to help the United States, could undo any good that results from the trade war he is fuelling.

The stronger the dollar becomes, the larger U.S. trade deficits may become, with monetary policy effectively tightening and strangling the economy.

The dollar is already having a huge impact. Its trade-weighted value has boomed almost 6% since September, reaching a near two-decade peak last month.

While tariff threats have forced Mexico and Canada to the negotiating table, China's been quick to fight back, and for currencies, delays which prolong uncertainty could be just as potent as the tariffs themselves.

For those trying to hedge the future direction of currencies it remains prudent to adopt a defensive position that will support assets deemed safer. The dollar is the most liquid and safest of all.

While some money may flow toward Japan's yen and Swiss franc, both are undermined by monetary policy, which in the U.S. - where the balance sheet has been reduced and interest rates are set to remain high - supports the greenback.

There is great potential for the dollar to rise further and should this sledgehammer approach to policy turn a spat into a war, the U.S. currency could rocket.

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