Dollar hovers near six-week low vs yen as US-China trade talks loom

Dollar hovers near six-week low vs yen as US-China trade talks loom

TOKYO,. The dollar hovered near a six-week low versus the yen early today, weighed down against its safe-haven Japanese peer as risk aversion gripped broader markets amid concerns that the US-China trade conflict could escalate.

Markets were nervously awaiting the start of two-day trade talks in Washington later in the global day to see if Chinese negotiators can convince the White House to back down on a threatened tariff hike on Friday.

The US currency stood at ¥109.905 (RM4.148) after going as low as 109.70 overnight, its weakest since March 25.

The dollar has sagged against the Japanese currency, which has advanced against a number of its peers. The yen tends to attract demand in times of political strife and market turmoil.

Expectations that the United States and China would reach an agreement soon to end their trade war have been upended this week, sending investors fleeing from riskier assets. Global stocks have retreated and government bonds have surged in turn.

Washington has accused Beijing of backtracking on commitments made during trade negotiations and US President Donald Trump has threatened to hike existing tariffs on Chinese goods tomorrow and impose fresh levies soon if there is no deal.

Trump said yesterday he would be happy to keep tariffs on Chinese imports, prompting Beijing to threaten retaliation.

“The yen owes much of its strength to gains made in the cross currency market. ‘Risk on, risk off’ has been the main market driver and the euro has been stuck in range as a result,” said Shin Kadota, senior strategist at Barclays in Tokyo.

“While the possibility of the upcoming US-China trade talks falling through is not yet a main scenario, the currency market is gradually beginning to price in such a likelihood.”

The Australian dollar traded at ¥76.89, not too far from a four-month low of 76.79 reached on Monday. The Aussie has shed roughly 1.5 per cent against the yen this week.

The euro struggled near a four-month trough of ¥123.09, having fallen 1 per cent so far this week.

Against the dollar, the euro was a shade higher at US$1.1196 , having spent the week stuck in a tight US$1.1218-US$1.1155 range.

The dollar index against a basket of six major currencies was little changed at 97.582.

The New Zealand dollar was up 0.1 per cent at US$0.6584 .

The kiwi had slumped to a six-month trough of US$0.6525 yesterday, when the Reserve Bank of New Zealand (RBNZ) cut interest rates to a record low of 1.5 per cent.

But the currency has managed to bounce back as the RBNZ did not give a strong indication of upcoming easing, saying interest rates were “balanced” at the moment. ? Reuters