The Japanese yen climbed to a three-month high against the greenback. Investors sought out the safe-haven currency, on U.S.-China trade conflict escalation fears.
Two days of trade talks begin in Washington on Thursday. Traders are waiting to see whether Chinese and U.S. negotiators can prevent more U.S. tariff increases.
Currency moves this week in response to the latest trade hostilities have been fairly muted. However, Thursday’s jump in the yen — which tends to attract demand in times of strife — suggested investor nerves are fraying. The main casualties have been the Australian dollar, a proxy for Chinese economic prospects, and the U.S. dollar.
In the past, the dollar has benefited from an increase in trade worries but this time the dollar has sagged against the Japanese currency. But U.S. President Donald Trump’s latest threat to raise tariffs on Chinese imports has seen the yen gain in recent days.
Focus is on trade talks on Thursday and Friday in Washington. Chinese Vice Premier Liu will try to salvage a deal that would avoid a sharp increase in tariffs scheduled to take effect on Friday.
Chinese Vice Premier Liu He visits the United States this week for trade talks despite Trump threats. U.S. officials have said China has backtracked on substantial commitments made during months of negotiations seeking to end their trade war. However, Trump said on Wednesday that China “broke the deal” reached in talks with the United States. He vowed not to back down on raising tariffs or imposing new ones unless Beijing “stops cheating our workers”.
START TRADINGForex – Yen climbed to 3-month peak on trade fears
Markets were nervously awaiting the start of two-day trade talks in Washington later in the day.
The safe-haven yen climbed 0.3% against the dollar to 109.6 yen, a three-month high. It took its gains to more than 1% so far this month.
Sterling was little changed around $1.30 on Thursday amid doubts that Brexit negotiations would get anywhere. British media reported on Wednesday the talks were close to collapse, causing sterling to fall. The pound was up 0.1%, at $1.3014, still near its weakest in a week. It was unchanged against the euro at 86.030 pence.
Gold prices were little changed on Thursday ahead of Sino-U.S. trade negotiations. Demand for government bonds, Japanese yen and a key technical resistance limited gains for the safe-haven metal. Spot gold edged up 0.2% to $1,283.41 per ounce at 0741 GMT. U.S. gold futures were also 0.2% higher at $1,284.10.
Silver was steady at $14.83 an ounce, while platinum was up 0.2% at $857.88.
Oil prices fell on Thursday, reversing earlier gains. An escalating trade battle between the United States and China counteracted upward pressure from a surprise decline in U.S. crude inventories. Brent crude oil futures were at $70.01 a barrel by 1214 GMT, down 36 cents. U.S. West Texas Intermediate (WTI) crude futures were at $61.64 per barrel, down 48 cents.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money