(Bloomberg) -- On Monday, the Japanese yen and the Swiss franc experienced notable gains as traders turned to these currencies for safety amidst escalating trade tensions. This surge followed statements from U.S. officials that indicated a firm stance on trade tariffs, suggesting that negotiations for any reductions would be a protracted process.

The Japanese currency rose by 1% to reach 145.41 per dollar, while the Swiss franc increased by 0.7%. This trend reflects a growing risk-off sentiment that has persisted for a second consecutive week. In contrast, the Australian dollar suffered a decline of 0.7%, marking it as the weakest performer among major developed market currencies.

The current shift towards safer assets is largely driven by the recent comments from U.S. officials. Over the weekend, it became evident that President Donald Trump is unwilling to soften his position regarding the reciprocal tariffs that were imposed last week. Treasury Secretary Bessent underscored that trade negotiations are complex and cannot be resolved within just days or weeks, further highlighting the urgency of the situation.

In the early hours of trading in Asia, futures for the S&P 500 index fell, while Treasury yields saw an uptick, signaling investor apprehension about the ongoing trade conflict. Nick Twidale, chief analyst at AT Global Markets in Sydney, noted, “If Trump maintains a hardline approach, we can expect more adverse impacts on risk assets. The lengthy timeframe for deals is detrimental to global trade and likely not what investors anticipated from this administration, which has recently moved quickly to adjust tariffs.”

As fears grow of a global economic slowdown and potential stagflation in the U.S., investors are increasingly gravitating towards haven assets. The trade war, particularly the retaliatory measures taken by China against American tariffs on Friday, triggered considerable volatility in both currency and equity markets. U.S. shares plummeted, posting their steepest decline since March 2020, underscoring the widespread concern among investors regarding the economic outlook.

Australia's economy, characterized by its small and open nature, was among the hardest hit by these developments due to its heavy reliance on international trade. The Australian dollar’s drop is the most significant since October 2008, coinciding with a sharp decline in Australian stock markets.

Market analysts observed that both President Trump and Treasury Secretary Bessent appeared unsettled by the recent market reactions. Chris Weston, head of research at Pepperstone Group in Melbourne, remarked, “The markets will undoubtedly seek to test their resolve this week as the situation continues to evolve.”

(Updates with more context)

Most Read from Bloomberg Businessweek

©2025 Bloomberg L.P.