Sino-US trade friction impacts foreign exchange market: US dollar once again becomes a safe haven.

Notice that the US dollar is strengthening against most major currencies, causing the recent escalation of tariff tensions between the US and China to shake risk assets and prompt investors to turn to safe-haven assets. The Bloomberg US Dollar Spot Index rose by 0.3%, reaching its highest level since August 1st, alongside a rise in treasury yields, while the stock market fell. The Australian dollar saw the biggest decline, dropping by 1% to a near two-month low; the pound also touched a two-month low after UK employment data was released. ING analysts Chris Turner and Francesco Pesole wrote that the US dollar's "reinvigorated safe-haven status" and "some additional bullish momentum for the dollar" could support the currency in the short term. Options markets show increased demand for bullish positions on the dollar, especially against the pound, Australian dollar, and Canadian dollar. Traders took the opposite approach with the yen, which was the strongest performer among G-10 currencies on Tuesday. Turner and Pesole stated, "If the market finds reasons to alleviate tensions over the Japanese political situation, the undervalued yen could be in a favorable position to benefit from further escalation." Traders are also watching for Federal Reserve Chairman Jerome Powell's important speech later on Tuesday to look for clues on whether recent market expectations for the central bank outlook have become overly dovish.