* Trump threatens tariffs on Mexico over illegal immigration
* Mexican peso set for worst day since October
* Traders pile on bets on U.S. rate cuts by year-end
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates market action, changes dateline, previous LONDON)
By Richard Leong
NEW YORK, May 31 (Reuters) - Investors rushed into the
perceived safety of Japanese yen on Friday, sending it to a
four-month high against the dollar, after U.S. President Donald
Trump's threat to impose tariffs on Mexico roiled financial
markets and stoked recession fears.
Taking aim at what he said was a surge of illegal immigrants
across the southern border, Trump vowed on Thursday to impose a
tariff on all goods coming from Mexico, starting at 5% and
ratcheting higher until the flow of people ceases. The Mexican peso tumbled against the greenback, losing as
much as 3.4% at one point, for its steepest single-day loss
since October.
Trump's surprise duties on Mexican imports "spurred sharp
losses in the Mexican peso and a general risk-off move that
strengthened the yen," said Marc Chandler, chief market
strategist at Bannockburn Global Forex LLC.
Several different currencies have served as safe havens
during the global trade conflict, but the yen has consistently
been among the strongest this year, and on Friday investors
appeared to opt for the Japanese currency.
The yen increased 0.89% at 108.655 per dollar JPY=EBS and
0.76% per euro EURJPY=EBS , respectively.
For May, the Japanese currency was on track to gain 2.50%
against the dollar and 3.17% versus the euro.
The Swiss Franc also enticed safe-haven buying, rising 0.26%
at $1.0051.
The impact of escalating trade tensions between Washington
and Beijing is starting to show up in economic data, with a key
measure of Chinese manufacturing activity disappointing
investors, and Trump's latest salvo fueled a rush on Friday to
safe-haven assets such as government bonds and the yen.
The U.S. dollar has itself served as a safe haven currency
in recent times, but on Friday, it fell 0.13% against a basket
of other currencies .DXY , hovering below a two-year peak
reached last week.
For the month, the dollar index was on track for a 0.4%
gain, extending its winning monthly streak to four.
The dollar's broad losses on Friday were compounded by
comments from senior policymakers, with the U.S. Federal Reserve
Vice Chair Richard Clarida discussing the possibility of rate
cuts should the world's biggest economy take a turn for the
worse, though he also said he thought the U.S. economy is in "a
very good place". U.S. interest rates futures implied traders expect at least
one rate cut from the Federal Reserve by year-end. Goverment data on Friday showed a modest pickup in inflation
in April, while a private report indicated a
stronger-than-forecast improvement in U.S. Midwest manfacturing
activity in May. ========================================================
Currency bid prices at 11:15AM (1515 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1144 $1.1130 +0.13% -2.85% +1.1179 +1.1126
Dollar/Yen JPY= 108.6400 109.6000 -0.88% -1.47% +109.6200 +108.5600
Euro/Yen EURJPY= 121.07 121.98 -0.75% -4.08% +122.0300 +120.9300
Dollar/Swiss CHF= 1.0051 1.0076 -0.25% +2.40% +1.0081 +1.0029
Sterling/Dollar GBP= 1.2618 1.2606 +0.10% -1.09% +1.2638 +1.2560
Dollar/Canadian CAD= 1.3525 1.3498 +0.20% -0.81% +1.3564 +1.3493
Australian/Doll AUD= 0.6929 0.6911 +0.26% -1.70% +0.6943 +0.6902
ar
Euro/Swiss EURCHF= 1.1200 1.1214 -0.12% -0.46% +1.1221 +1.1187
Euro/Sterling EURGBP= 0.8830 0.8825 +0.06% -1.71% +0.8874 +0.8820
NZ NZD= 0.6517 0.6509 +0.12% -2.98% +0.6535 +0.6499
Dollar/Dollar
Dollar/Norway NOK= 8.7551 8.7691 -0.16% +1.35% +8.7945 +8.7372
Euro/Norway EURNOK= 9.7570 9.7623 -0.05% -1.50% +9.8034 +9.7517
Dollar/Sweden SEK= 9.5147 9.5349 -0.07% +6.15% +9.5642 +9.5058
Euro/Sweden EURSEK= 10.6030 10.6099 -0.07% +3.32% +10.6645 +10.6005
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GRAPHIC: Japanese yen surges https://tmsnrt.rs/2Kgn1xB
GRAPHIC: Traders' U.S. interest rate expectations https://tmsnrt.rs/2WP9W1m
GRAPHIC: Traders' U.S. interest rate expectations interactive
https://tmsnrt.rs/2WP9q3q
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