FOREX-Dollar slides, investors look for safe havens as Trump ups tariff ante

By Rae Wee

SINGAPORE, Jan 19 (Reuters) - The dollar fell on Monday as investors unnerved by U.S. President Donald Trump's latest tariff threats against Europe over Greenland piled into the safe-haven yen and Swiss franc, in a broad risk-averse move across markets.

Trump said over the weekend he would impose an additional 10% import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, until the United States is allowed to buy Greenland.

Major European Union nations decried the Greenland tariff threats as blackmail on Sunday, with France proposing to respond with a range of previously untested economic countermeasures.

In the foreign exchange market, the knee-jerk reaction in early Asia trade was to sell the euro EUR= and sterling GBP=, pushing the currencies to a seven-week low of $1.1572 and a one-month trough of $1.3321, respectively.

As the trading day got underway, both bounced from their lows, however, with the dollar coming under pressure as investors assessed the longer-term implications of Trump's latest move on the greenback.

That helped the euro reverse its losses, gaining 0.3% to trade at $1.1634, while the British pound similarly recovered 0.16% to $1.3397.

"Typically you would think tariffs being threatened would lead to a weaker euro," said Khoon Goh, head of Asia research at ANZ.

"But, as we've seen last year as well, when the 'Liberation Day' tariffs were getting put in place, the impact in FX markets actually has been more towards dollar weakness every time there is heightened policy uncertainty emanating from the United States."

Investors had dumped the dollar after Trump unveiled sweeping tariffs on the world last April, triggering a crisis of confidence in U.S. assets.

A similar trend played out on Monday, as the greenback slid 0.45% against the safe-haven Swiss franc CHF= to 0.7985, and was down 0.21% at 157.77 yen JPY=.

However, some yen gains were capped by domestic politics, with a looming snap election in Japan raising expectations of greater fiscal stimulus, in turn hurting its currency and bonds.

The dollar index =USD eased slightly to 99.11.

"While you would argue that the tariffs threaten Europe, in fact, it's actually the dollar that is bearing the brunt of it, because I think markets are pricing in increased political risk premia on the U.S. dollar," Goh added.

Cryptocurrencies, often used as a gauge of risk sentiment, were also sold off heavily.

Bitcoin BTC= was down 3% at $92,563.09, while ether ETH= sank more than 4% to $3,200.99.

In Asia, data on Monday showed China's economy grew 5.0% last year, meeting the government's target by seizing a record share of global demand for goods to offset weak domestic consumption.

"If you look at the data in more detail, I think getting into the fourth quarter, it seems like things started to become quite weak," said Vincent Chan, China strategist at Aletheia Capital.

"Investment growth slowed down very sharply, (and) consumption has been weak for a long time."

But the onshore yuan CNY=CFXS climbed to a fresh 32-month peak of 6.9630 per dollar, shrugging off the mixed data, after China's central bank set its strongest daily fixing in more than two years.

The Australian dollar AUD=, which is often used as a liquid proxy for the yuan, did not budge on the data. It was up 0.06% at $0.6695.

The New Zealand dollar NZD= rose 0.42% to $0.5776.