The yen rose on Tuesday as traders favored the safe-haven currency after the United States announced it was considering tariffs on $11 billion of European goods and the International Monetary Fund downgraded its outlook on the global economy.
These factors weighed on market sentiment, spurring selling on Wall Street and touching off a partial reversal of earlier gains in oil prices. The pull back in crude and other commodity prices cut into the initial gains of the Canadian and Australian dollar as well as emerging currencies.
"Yen is now the top dog with lower stocks weighing on risk appetite," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
At 3:20 p.m., the yen was 0.31% higher at 111.12 per dollar and up 0.22% per euro.
Major U.S. stock indexes were lower with the S&P 500 index down 0.55%. Brent oil futures were 0.72% lower at $70.59 a barrel after hitting $71.34 earlier on Tuesday, the highest since November.
On Monday, the U.S. Trade Representative proposed a list of European Union products ranging from large commercial aircraft and parts to dairy products and wine on which to slap tariffs as retaliation for European aircraft subsidies.
The IMF on Tuesday cut its global growth forecasts for 2019 to 3.3%, the slowest expansion since 2016 and from its earlier projection of 3.5% in January.
While the IMF reduced its calls on expansion for both Europe and the United States, the euro held its modest gains versus the dollar, last up 0.15% at $1.1276.
"Lots of negativity is already baked into the euro. Today's developments, while not encouraging, didn't meaningfully add to the bloc's weak narrative," Manimbo said.
The latest IMF forecasts, together with the retreat in oil prices, put pressure on the Australian and Canadian dollars. Both countries are big commodities producers.
The Aussie was flat at $0.7125 after touching a near three-week high, while the loonie was little changed at C$1.332 after hitting C$1.3285, its strongest since March 21.
Meanwhile, sterling was down 0.08% at $1.3052 after a German government spokesman denied a media report that Chancellor Angela Merkel was open to put a time limit on the Northern Ireland backstop in a Brexit agreement.