The greenback declined as precious metals surged on Sunday, as financial markets began to respond to President Donald Trump’s
Against the euro, the dollar fell 0.31% to $1.16, and against the yen, it dropped 0.32% to 157.58. Meanwhile, gold climbed 1.95% to a new record of $4,684.30 per ounce, while silver surged 5.66% to $93.53, also hitting a new peak.
U.S. stock and bond futures were inactive on Monday due to the Martin Luther King Jr. Day holiday.
On Saturday, Trump stated that Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland will face a 10% tariff starting February 1, increasing to 25% by June 1, until a “Deal is reached for the Complete and Total purchase of Greenland.”
The announcement followed the deployment of troops to Greenland by these countries over the past week, reportedly for training purposes, at Denmark’s request.
Trump has remained steadfast in his push to take over Greenland, keeping military options under consideration, while the administration has also left the door open to purchasing the island.
Meanwhile, the European Union is considering retaliatory measures, including the bloc’s that has been characterized as a “trade bazooka” due to its scale and intensity.
Trump’s recent tariffs not only pose an existential risk to the trans-Atlantic alliance but could also endanger the dollar’s dominance and its so-called exorbitant privilege.
“The dollar’s status as a reserve currency enables us to live beyond our financial capacity. Soaring debt, tariffs, and military threats put that status at risk,” Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management, . “Once it is lost, economic collapse will ensue.”
And the as European nations hold $8 trillion in U.S. bonds and equities, nearly double the amount held by the rest of the world combined, according to George Saravelos, head of FX research at .
Rep. Thomas Massie, R-Ky., took note of America’s vulnerability in global financial markets, responding to Schiff’s post.
“As the dollar’s reserve currency status wanes, our capacity to tax the world by printing more money diminishes,” . “Once reserve status is lost, sustaining current spending levels and servicing the debt will be even more burdensome for Americans, who will face the full brunt of the inflation tax.”