FOREX-Trade fears and falling yields push yen to 2-week highs vs dollar

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, May 29 (Reuters) - The Japanese yen firmed to a
two-week high versus the dollar on Wednesday as concerns of a
further escalation in the trade conflict between the United
States and China prompted investors to rush to perceived
safe-haven assets.
A global wave of risk aversion sent sovereign bond yields
tumbling across the world. Benchmark U.S. Treasury yields fell
to their lowest levels since September 2017 while New Zealand
bond yields tumbled to a record low.
The People's Daily newspaper, owned by China's ruling
Communist Party, said Beijing was ready to use rare earths for
leverage in its trade war with the United States. It added in an
extremely strongly worded commentary "don't say we didn't warn
you". The yen JPY=EBS edged 0.2 percent higher to 109.15 against
the dollar, its highest level since May 15 this year and not far
away from an early February high of 109.02 yen.
But the dollar's losses remain broadly confined against the
yen as the greenback remained firm against other currencies such
as the euro and the pound.
The dollar - bolstered by its status as the world's reserve
currency - was less than half a percent below a two-year high of
98.37 hit last week against a basket of its rivals .DXY . It
was broadly steady at 97.97.
"Investors currently regard the greenback as the go-to
instrument in a time when global growth is threatening to turn
lower on the back of a trade dispute and political fragmentation
abroad," said Konstantinos Anthis, head of research at ADSS.
The U.S. Treasury Department said in a report on Tuesday it
reviewed the policies of an expanded set of 21 major U.S.
trading partners and found that nine required close attention
due to currency practices: China, Germany, Ireland, Italy,
Japan, South Korea, Malaysia, Singapore, and Vietnam.
Shusuke Yamada, currency and equity strategist at Bank of
America Merrill Lynch, said the report had a muted impact on
risk sentiment, adding that investors are watching how the
United States and China will deal with their trade dispute going
into the G20 meeting in Japan next month.