Dollar up for a second day on global trade tension

Key Points
  • Euro falls on automobile tariff fears
  • Trump wants to push ahead with China tariffs next week
  • Emerging market currencies drop

The dollar rose for a second straight session on Friday on concerns about global trade conflict, this time between the United States and the European Union.

On the week, the dollar index, a gauge of the greenback's value against six currencies was still up 0.4 percent. Over the last two weeks, the dollar has fallen 1.3 percent.

The greenback had rallied late Thursday in a safe-haven move after Bloomberg News reported that U.S. President Donald Trump wanted to move ahead on a plan to impose tariffs on Chinese imports worth $200 billion next week. That concern spilled over to the European Union after Trump also said the European Union's proposal to eliminate auto tariffs was "not good enough".

Shaun Osborne, chief FX strategist, at Scotiabank said the markets have a "distinct risk-off look" the day after Trump's comments. "President Trump's pronouncements on Bloomberg late yesterday, which are critical of the...EU, willing to move on Chinese tariff...are adding to market concerns broadly," he said.

The euro was down 0.6 percent at $1.1601 after losing about 0.3 percent overnight when a rise in Italian government bond yields put additional pressure on the currency. The Japanese yen and Swiss franc also rose on safe-haven buying, with investors fearful about Europe's outlook.

Trump has threatened to impose tariffs on cars assembled by German automakers Volkswagen AG, Daimler AG and BMW AG. Trump also threatened in an interview with Bloomberg on Thursday to withdraw from the World Trade Organization if "they don't shape up."

Those remarks dampened any positive sentiment following negotiations over the North American Free Trade Agreement (NAFTA).

The cautious mood helped lift the against the dollar, which stayed flat. The Swiss franc rose for the sixth successive session versus the dollar, which fell 0.1 percent to 0.9670 franc.

Emerging market currencies fell, as well. The Argentinian peso , the world's worst-performing currency this year, was down about 1 percent against the dollar, which last traded at 38.00 pesos. On Thursday, the Argentine peso tumbled 10 percent, bringing month-to-date losses to 27 percent. Argentina's central bank voted unanimously at an emergency meeting on Thursday to raise its benchmark rate to 60 percent from 45 percent.