Haven currencies, including the Japanese yen and Swiss franc bounced higher on Monday as the trade row between the U.S. and China remained in focus.
Trade tensions have been on the rise, with China vowing to retaliate against a U.S. round of tariffs by slapping duties on American export products, including crude oil, and suspending all previous trade agreements with Trump’s administration.
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Uncertainty over future relations between the two trade giants saw investors drop risky emerging market currencies and go for safer ones. Japan’s yen USDJPY, -0.18% and Switzerland’s USDCHF, -0.2607% both strengthened against their U.S. counterpart, with one dollar buying ¥110.45, down from ¥110.65 late Friday in New York, and 0.9942 francs, down from 0.9974 late Friday.
But the dollar index remained little changed. The ICE U.S. Dollar Index DXY, -0.04% was last slightly up at 94.827, after logging a gain of just over 1% last week, according to FactSet. The broader WSJ Dollar Index BUXX, +0.07% was little changed in positive territory at 88.07.
“Traditional safe havens are naturally doing well this morning with gold up a couple of dollars and the yen in the green against the dollar, euro and pound,” said Craig Erlam, senior market analyst at Oanda.
The euro-yen pair EURJPY, -0.19% was down 0.1% with one euro buying ¥128.27, according to FactSet.
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China’s yuan, which is pegged to the dollar and trades in a tightly defined range, slipped, with one dollar buying 6.4397 onshore yuan USDCNY, +0.1242% , little changed but in positive territory, and 6.4578 offshore yuan USDCNH, +0.3558% , up 0.3%.
Beyond trade issues, traders also kept global interest rate differentials on their minds, as the Bank of England is set Thursday to deliver its monetary policy update. The British pound, already stuck in a downtrend since April, is expected to be confined to lackluster trading in the lead-up to the policy meeting.
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“The key event of the week for the pound is the BOE meeting this Thursday. We expect the pound price action to be rather muted both going into the meeting and after it, given the likely fairly vague policy signal in the post-meeting statement,” ING analysts said in a note.
The British pound GBPUSD, -0.3238% last traded at $1.3249 compared with $1.3280 late Friday.