The dollar rose to an 11-month high today and the euro slumped after US President Donald Trump threatened more tariffs on China in an escalating trade dispute investors fear could hurt global growth. 

Hostility over trade between the world's two largest economies intensified today when Trump threatened to impose a 10% tariff on $200 billion of Chinese goods.

This in turn prompted a swift warning from Beijing of retaliation. 

Months of tit-for-tat trade measures between Beijing and Washington have had a fairly limited impact on currencies up to now. 

But this week's threats have hurt currencies including the Australian dollar and Swedish crown, vulnerable to protectionist measures. 

The dollar rose against a basket of currencies as traders bet on a escalating trade war forcing inflation up in the US because of costlier imports, raising the prospect of more interest rate rises. 

Chinese stocks sank almost 4% and the yuan slumped to a five-month low overnight.

Analysts said that Asian currencies and stocks are feeling most of the impact compared to Europe but that could quickly change if this escalates. 

Investors bought currencies traditionally considered safe havens. 

The Japanese yen climbed 0.8% against the dollar to 109.56 yen, its highest level in a week and the Swiss franc rose 0.3 percent against the dollar to 0.9918 franc. 

Traders are divided other whether the row will affect the dollar meaningfully. 

Currency markets in general dislike trade intervention, and previous protectionist efforts by the US government have weakened the dollar. 

However, the dollar strengthened half a percent versus a basket of major currencies to hit $95.266 today, its highest since July 2017.

"If the situation were to escalate the main beneficiary would be the U.S. dollar," said Commerzbank currency strategist Thu Lan Nguyen. 

"And of course a far-reaching trade war would be detrimental for everyone in the end, but mainly the countries whose growth heavily depends on foreign trade," she said.

China's commerce ministry responded today by saying Beijing would fight back firmly with "qualitative" and "quantitative" measures if the USs publishes additional tariffs. 

The yuan slid to a low of 6.4490 to the dollar at one point, its weakest since January 15. 

The euro, meanwhile, remained under heavy pressure due to a dispute in Germany's governing coalition and expectations the European Central Bank will hold interest rates steady up to the summer of 2019. 

Chancellor Angela Merkel's Bavarian allies may defy her by implementing a plan to limit immigration at the German border, which could destabilise her three-month-old coalition. 

The single currency today slumped to a two-week low of $1.1531 after ECB President Mario Draghi called for a patient approach to European monetary policy at a forum in Portugal. 

The euro had its biggest fall in two years last Thursday after Draghi offered dovish guidance for monetary tightening while outlining details of the end of quantitative easing. 

Investors and businesses worry that a full-blown trade battle could derail global growth. 

The Australian dollar, a liquid hedge for risk, sank to a one-year low of A$ 0.7380 on the escalating trade dispute and as base metal prices slid. 

The Canadian dollar, meanwhile, weakened to a one-year low of C$ 1.3237 overnight, before paring some of its losses today as investors worried about Canada's own trade feud with the US. 

Emerging market currencies also came under pressure, with the South African rand shedding 1.9% to touch its seven-month low of 13.9150.