Forex – Tariff Threats Hit Yuan, Boost Yen Demand

© 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 to 25% from the current 10% this Friday, sending global equities reeling and increasing the safe haven appeal of the Japanese yen.

The 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 and dollars, whose countries have close economic ties with China, showed similar declines.

Riskier currencies such as the , and were also out of favor on Monday.

The , 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, 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 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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