The US dollar index plunged 0.8 per cent when markets returned today, the worst day for the US currency since August.
This index compares the US dollar against six major currencies, including the euro.
It resulted in the Australian dollar soaring to a 15-month high, rising 0.3 per cent to 67.66 US cents.
The last time the Australian dollar strengthened to 67 cents on the US dollar was in October 2024.
The euro was also up 0.65 per cent against the US dollar today.
Meanwhile, the Australian Stock Exchange (ASX) 200 index dropped 0.5 per cent to 8775 points by lunchtime today.
World stock markets had been bracing for more volatility amid Trump’s latest tariff face-off in Europe.
The president threatened eight European countries with tariffs if they opposed his plans to seize Greenland.
Trump also threatened to place a 200 per cent tariff on champagne after French President Emmanuel Macron declined his invitation to join his international organisation “Board of Peace”.
Investors are rattled by fears the trade turbulence which kicked off last year – dubbed “Sell America” – could return to Wall Street.
It appears many are hedging bets that Trump’s NATO appearance in Davos, Switzerland, could result in another wave of tariffs if Denmark does not cede Greenland.
The currency’s renewed strength followed Trump’s announcement of a 90-day pause on tariffs into the US on most countries.
Trump told reporters at the time that he pulled back on many global tariffs – but not on China – because people were “yippy” and “afraid” due to the stock market declines.
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