* China retaliates by raising tariffs against U.S.
* Concerns China will sell Treasuries hurts greenback
* Sterling slips on fears of no Brexit deal
(Adds sterling, updates prices)
By Karen Brettell
NEW YORK, May 13 (Reuters) - The Chinese yuan dropped to its
lowest levels against the U.S. dollar since December on Monday
as the trade war between the United States and China escalated,
with each country raising tariffs on the other's goods.
China plans to impose higher tariffs on $60 billion worth of
U.S. goods, the finance ministry said on Monday, after the
United States announced a tariff hike on $200 billion of Chinese
products on Friday. U.S. President Donald Trump said Beijing "broke the deal" by
reneging on earlier commitments made during months of
negotiations while China said on Sunday it would not swallow any
"bitter fruit" that harmed its interests. The yuan CNH= weakened to 6.92, its lowest level since
Dec. 24. China is expected to intervene to stop any plunge
through 7 against the dollar.
Rising tensions between the two countries has also increased
fears that China may sell its vast holdings of Treasuries as
punishment or as a negotiation tactic against the United States.
That hurt the greenback against safe-haven currencies the
Japanese yen and Swiss franc. It also briefly weakened against
the euro, before retracing the losses.
“They own a sizable chunk of Treasuries and that's got the
market spooked a little bit and has got the dollar trading on
the defensive against some of the other major currencies,” said
Bipan Rai, North American head of FX strategy at CIBC Capital
Markets in Toronto.
The euro may also benefit against the dollar as the eurozone
has a balance of payments surplus, and “in times of trade war
surplus currencies tend to do reasonably well,” Rai said.
Investors are also focused on whether Trump will impose
tariffs on imported cars and auto parts as talks continue with
the European Union and Japan.
Trump received a "Section 232" investigation report in
February, widely believed to have concluded that car and auto
part imports pose a risk to national security. The president's
90-day deliberation period is due to end on May 18. “The market is expecting that the Trump administration will
extend that deadline. If there is no indication that they will
you could see equities take a bit of a pounding this week,” Rai
said.
Sterling also slipped to its lowest levels in two weeks on
concerns that the British parliament will fail to reach a
cross-party deal on Brexit.
Up to 150 lawmakers from Britain's opposition Labour party
would reject an agreement that did not include a referendum
confirming it, shadow Brexit secretary Keir Starmer told the
Guardian newspaper. Currency bid prices at 2:17 p.m. (1817 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1231 $1.1233 -0.02% -2.08% +1.1265 +1.1224
Dollar/Yen JPY= 109.2400 109.9400 -0.64% -0.93% +109.8400 +109.0300
Euro/Yen EURJPY= 122.70 123.52 -0.66% -2.79% +123.5300 +122.5600
Dollar/Swiss CHF= 1.0057 1.0116 -0.58% +2.48% +1.0117 +1.0050
Sterling/Dollar GBP= 1.2965 1.2999 -0.26% +1.63% +1.3040 +1.2942
Dollar/Canadian CAD= 1.3471 1.3412 +0.44% -1.24% +1.3481 +1.3417
Australian/Doll AUD= 0.6945 0.7000 -0.79% -1.48% +0.7002 +0.6941
ar
Euro/Swiss EURCHF= 1.1299 1.1365 -0.58% +0.40% +1.1370 +1.1296
Euro/Sterling EURGBP= 0.8663 0.8636 +0.31% -3.60% +0.8681 +0.8623
NZ NZD= 0.6569 0.6597 -0.42% -2.20% +0.6605 +0.6564
Dollar/Dollar
Dollar/Norway NOK= 8.7554 8.7121 +0.50% +1.35% +8.7696 +8.7056
Euro/Norway EURNOK= 9.8350 9.7863 +0.50% -0.74% +9.8530 +9.7901
Dollar/Sweden SEK= 9.6320 9.6113 +0.23% +7.45% +9.6637 +9.6036
Euro/Sweden EURSEK= 10.8212 10.7960 +0.23% +5.43% +10.8492 +10.8053
(Editing by Susan Thomas and Lisa Shumaker)