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FOREX-Yen, Swiss franc hold gains as trade war worries deepen

Published 04/12/2019, 01:36
Updated 04/12/2019, 01:45
© Reuters.  FOREX-Yen, Swiss franc hold gains as trade war worries deepen
DXY
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* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Trump's comments on trade roil markets

* Prolonged trade war hurts global growth

* Safe-havens gain, dollar weakens broadly

By Stanley White

TOKYO, Dec 4 (Reuters) - The yen and Swiss franc held gains

against the dollar on Wednesday as appetite for safe-havens

spiked after U.S. President Donald Trump warned a trade deal

with China might not come until after the 2020 U.S. presidential

election.

In offshore trade, China's yuan traded near its weakest

versus the dollar since October due to waning hopes for a truce

in trade war between the world's two-largest economies.

The dollar was broadly sold against major currencies, which

helped sterling climb to its highest level in more that six

months against the greenback.

Trump's statement that he had "no deadline" for an agreement

with China weakened sentiment and roiled financial markets,

because trade friction could drag on global growth longer than

many investors had anticipated.

The diminishing prospects for an agreement also reinforced

expectations the United States could carry out its plan to raise

tariffs even further on Chinese goods on Dec. 15.

"Expectations for a U.S.-China trade deal are fading, and

dollar/yen has broken its support levels, so the bias is tilted

to the downside," said Takuya Kanda, general manager of research

at Gaitame.com Research Institute in Tokyo.

"More tariffs would push dollar/yen lower still."

The yen JPY=EBS stood at 108.54 versus the dollar on

Wednesday, close to its strongest since Nov. 22.

The Swiss franc CHF=EBS was quoted at 0.9875 versus the

dollar, near its highest level since Nov. 4.

Both the Japanese and Swiss currencies tend to be bought as

safe-havens during times of uncertainty.

The offshore yuan CNH=D3 stood at 7.0691 per dollar, close

to its weakest level since Oct. 18.

U.S. Commerce Secretary Wilbur Ross on Tuesday said that

while staff-level talks are continuing with Chinese officials,

no high-level meetings are scheduled. If there is no deal or substantial progress in talks before

Dec. 15, tariffs on remaining Chinese imports, including cell

phones, laptop computers and toys, will take effect, Ross told

CNBC on Tuesday.

The dollar index .DXY against a basket of six major

currencies was quoted at 97.737, having skidded to a one-month

Sterling GBP=D3 , meanwhile, benefited from the dollar's

slide and rose to $1.3014, the highest since mid-May this year.

Trump's comments on trade so far this week have already

caused a major stir.

On Monday, he said he would hit Brazil and Argentina with

trade tariffs for "massive devaluation of their currencies".

The United States then threatened duties of up to 100% on

French goods, from champagne to handbags, because of a digital

services tax that Washington says harms U.S. tech companies.

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