* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Recasts; adds analyst quotes; updates prices; changes
dateline, previous LONDON)
By Kate Duguid
NEW YORK, Aug 28 (Reuters) - The U.S. dollar was modestly
higher against the yen on Wednesday morning, but the move
indicated little change in investor sentiment as the Japanese
currency largely clung to its recent gains on growing fears of a
global economic downturn.
The yen stood at 105.83 per dollar JPY= , 0.10% weaker on
the day, but nevertheless close to the 2-1/2-year high of 104.44
hit on Monday as renewed trade tension sent investors into
safe-haven assets like the Japanese currency and government
bonds.
Two-year U.S. government bond yields US2YT=RR rose further
above 10-year yields US10YT=RR , a deepening of the yield-curve
inversion, a widely recognized signal of coming recession.
Investors are worried that the trade conflict between the United
States and China could tip the world into an economic slowdown.
"Much, if not all, of the decline in dollar/yen is simply
down to markets becoming more risk-averse," said Adam Cole,
currency strategist at RBC Capital Markets.
The dollar bid on Wednesday however, was unlikely to be the
result of a risk-off move.
"This supports our view that as bad as the risks have gotten
in the U.S., the rest of the world looks even shakier. Risks of
hard Brexit continue to rise, while Italian political drama
continues," said Win Thin, global head of currency strategy at
Brown Brothers Harriman, referring to the potential for the UK
to leave the European Union without a deal on Oct. 31.
The dollar index, which measures the U.S. currency against a
basket of six currencies, rose 0.19% to 98.186 .DXY . The
Chinese yuan edged lower to 7.1690 CNH= in offshore markets,
not far from the record low of 7.186 it touched on Monday.
Elsewhere, sterling slumped as much as 1% against the euro
and the dollar on British Prime Minister Boris Johnson's move to
limit parliament's opportunity to derail his Brexit plans.
A government source said the prime minister, who has vowed
to take Britain out of the EU without a divorce deal if
necessary, would set an Oct. 14 date for the Queen's Speech: the
formal state opening of a new session of parliament.
That would effectively shut parliament starting in
mid-September for around a month and reduce the parliamentary
time in which lawmakers could try to block a no-deal Brexit.
Sterling was last down 0.68% at $1.2204 GBP= and 0.62%
lower versus the euro at 90.77 pence EURGBP= , just off the
day's lows.
The euro was slightly weaker against the dollar EUR= , down
0.11% at $1.1078 with little in the way of new economic data
scheduled for Wednesday or developments to spark bigger moves.
GRAPHIC: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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