- Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
The dollar and the yen strengthened on Tuesday as investors bid up safe haven assets amid tensions around global trade and strains in emerging market currencies.
Fears of a hit to global growth from U.S. President Donald Trump's 'America First' protectionist policies have kept markets in a state of heightened anxiety for much of this year.
On Saturday Trump said there was no need to keep Canada in the North American Free Trade Agreement and warned Congress not to meddle with the talks to revamp NAFTA or he would terminate the trilateral trade pact.
"It seems that the dollar, helped by rising interest rates, and the yen, the typical haven currencies, are supported by the confusion in the rest of the world," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
The dollar index against a basket of six currencies .DXY was 0.1 percent higher at 95.236 as of 0115 GMT, nearing its highest level since Aug. 27.
The dollar's status as the world's reserve currency tends to attract safe haven bids in times of market turmoil and political tensions.
The euro EUR= was down 0.15 percent at $1.1600. Data released on Monday showed euro zone manufacturing growth slowing to a near two-year low in August as optimism dwindled due to the lingering threat of a global trade war.
Similar surveys in Asia showed the region's key exporting nations coming under strain from the escalating global trade frictions.
The yen JPY= rose 0.05 percent to 111.05 yen. It was also higher against other major currencies, including the euro, gaining about one-fifth of a percent to 128.80 yen EURJPY= .
Investors remained on edge over ructions in emerging markets. Currencies including the Argentine peso, Turkish lira, South African rand, Brazilian real, Indonesian rupiah and Indian rupee have suffered in recent weeks.
"If the widespread emerging market confusion causes a downgrade of the economic outlook globally, it's a negative for resource-exporting countries and their currencies, like the Australian dollar and New Zealand dollar, whereas it should be a supporting factor for the dollar and the yen," Mizuho's Yamamoto said.
The Australian dollar AUD=D3 fell about 0.25 percent to $0.71935 earlier on Tuesday, not far off a 20-month low of $0.71655 touched during the previous session.
The yen strengthened about 0.3 percent against the Aussie to 79.89 yen AUDJPY= .
The Reserve Bank of Australia holds its September policy meeting on Tuesday and is considered certain to keep rates at a record-low 1.5 percent.
