FOREX-Mounting trade concerns pull dollar lower against yen, franc

(Recasts; adds analyst quote; updates prices; changes dateline,
previous LONDON)
By Kate Duguid
NEW YORK, June 3 (Reuters) - The U.S. dollar fell on Monday
morning, hitting a 4-1/2 month low against the Japanese yen and
a two-month low against the Swiss franc as President Donald
Trump hardened his trade stance toward countries beyond China.
Trade tensions have taken center stage in recent weeks as
Trump has increased tariffs on Chinese imports, threatened to
raise tariffs on Mexican imports and removed preferential trade
treatment for India. The mounting tension has prompted investors
to move out of riskier assets like U.S. stocks and into
safe-havens like the yen and franc.
"Though we think the recent warning shot towards Mexico
could be resolved, the road ahead on the global trade front is
likely to remain challenged until the G20 later this month,"
wrote Mark McCormick, global head of foreign exchange strategy
at TD Securities.
"This backdrop leaves us taking a sell-on-rally posture with
dollar/yen."
The yen JPY= hit its strongest level against the dollar
since Jan. 14, at 108.05, and was last at 108.31, roughly
unchanged from the prior session, in which the yen strengthened
the most against the dollar within a single day since early
January. Against a basket of six other major currencies, the
dollar was lower at 97.536 .DXY , though it is still up 1.4%
for the year.
The franc CHF= has risen close to levels at which the
Swiss National Bank has traditionally intervened to keep the
currency weak. Against the euro EURCHF= it rallied more than
half a percent to 1.112 francs, its strongest since July 2017,
though it was last weaker at 1.118. Against the dollar it was at
its strongest since April 3, with the dollar 0.36% weaker at
0.997 francs.
"While the Swiss franc has appreciated strongly in recent
weeks, much of that gain is due to the wave of risk aversion
sweeping across markets and we need to see further substantial
gains before the central bank has to step in," said Manuel
Oliveri, a currency strategist at Credit Agricole in London.
The Swiss National Bank, which pursues a monetary policy of
negative interest rates and currency intervention, has
traditionally intervened when the franc has risen to around 1.10
francs per euro, but low inflation and trade tensions suggest
the franc has to gain far more from current levels.
The euro was stronger on the day at $1.121, erasing some of
the franc's gains, but investors remained broadly cautious on
the outlook of the single currency as manufacturing data in the
eurozone contracted for a fourth month in July.