* Offshore Chinese yuan stable after Monday's all-time low
* Turkish lira falls after Monday's flash crash
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Olga Cotaga
Aug 27 (Reuters) - The Japanese yen rose and 10-year
Treasury yields fell on Tuesday as investors fled to safer
assets amid worries the U.S.-China trade conflict would get
worse, days after both sides announced new tariffs.
On Friday, China said it would increase tariffs on $75
billion worth of American goods. The United States retaliated by
saying it would raise existing tariffs on $250 billion worth of
Chinese goods to 30% from 25% on Oct. 1.
U.S. President Donald Trump also said he would tax another
$300 billion worth of Chinese imports 15%, rather than the 10%
he had planned. Those levies go into effect on Sept. 1.
On Monday, speaking on the sidelines of the G7 summit of
world leaders in France, Trump said Chinese officials had
contacted U.S. trade counterparts overnight and offered to
return to the negotiating table.
Trump's comments sparked a wave of so-called risk-on trades,
which initially boosted the dollar, weakened safe-haven
currencies, and lifted stock markets. However, doubts crept in after a Chinese Foreign Ministry
spokesman said he was unaware that a phone call had taken place.
The Commerce Ministry, which typically releases statements on
trade calls, did not respond to a request for comment.
"The yen has been one of the best-performing global
currencies this year and continues to benefit from building
downside risks to global growth from escalating trade tensions,"
said Lee Hardman, currency analyst at MUFG.
The Japanese currency was last up by 0.5% at 105.63 against
the dollar JPY=EBS . That wasn't as strong as Monday's gain,
when it reached a three-year high, excluding the January flash
crash. The yen has gained 3.6% against the dollars as the trade
war drove traders to safe-haven assets.
The yen is "likely to strengthen further if tensions
continue to build," Hardman said.
Ten-year U.S. Treasury yields US10YT=RR fell to 1.5097%,
keeping the yield curve inverted as two-year yields traded at
1.5264% US2YT=RR , a sign of an impending recession.
The offshore Chinese yuan, sensitive to U.S.-China trade
disputes, was lower Tuesday after plunging to a record low of
7.1870 against the dollar the day before. It last traded down
0.1% at 7.1770 CNH=EBS .
China's central bank lowered its official yuan midpoint to
an 11-1/2-year low on Tuesday, but stronger than traders had
expected. The Turkish lira was down by 0.4% at 5.8452 against the
dollar TRYTOM=D4 , having plunged Monday by more than 10% in a
second flash crash this year.
Elsewhere, major currencies were relatively stable.
The euro was up by 0.1% at $1.1113 EUR=EBS and the index
that tracks the dollar against six other currencies .DXY was l
down 0.2% at 97.898.
The pound was up 0.2% at $1.2242 GBP=D3 and 0.1% against
the euro at 90.765 pence EURGBP=D3 .
Yen stays up after 3-year jump on Monday https://tmsnrt.rs/2Zmf6aI
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