Forex - Tariff Threats Hit Yuan, Boost Yen Demand

  • Forex News
Forex - Tariff Threats Hit Yuan, Boost Yen Demand
Credit: © Reuters. - U.S. President Donald Trump’s threats to hike tariffs on Chinese good sent ripples through financial markets on Monday, dampening risk sentiment and boosting safe haven assets.

Trump announced over the weekend plans to raise tariffs on $200 billion in Chinese imports to 25% from the current 10% this Friday, sending global equities reeling and increasing the safe haven appeal of the Japanese yen.

The Chinese yuan to the contrary fell to this year’s low as traders worried over the impact of the tariff increase on the world’s second largest economy. Both the Aussie and New Zealand dollars, whose countries have close economic ties with China, showed similar declines.

Riskier currencies such as the Turkish lira , Mexican peso and Russian ruble were also out of favor on Monday.

The U.S. dollar index , which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged forward 0.1% to 97.34 by 11:20 AM ET (15:20 GMT). The weekly Commitment of Traders Report from the U.S. Commodity Futures Trading Commission showed that traders were the most bullish on the greenback since December 2015, with bets of $34.9 billion.

With the U.K. celebrating a bank holiday on Monday, cable fell 0.6% as the opposition Labour Party complained that British Prime Minster Theresa May was leaking details of their Brexit compromise, putting an agreement at risk.

The euro meanwhile managed to hold its own against the dollar as euro zone business activity unexpectedly improved in April and retail sales for March managed to evade an expected decline.

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