By Stanley White
TOKYO (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 be in place until after the 2020 U.S. presidential election.
That sent the Chinese yuan
The U.S. currency, however, was broadly sold against its major rivals, which helped sterling climb to its highest level in more that six months on the greenback.
Trump’s statement that he had “no deadline” for an agreement with China hurt sentiment and roiled financial markets. Global trade frictions have already weakened world growth with many economies struggling to find their footing in the face of softening exports, investments and corporate profits.
The offshore yuan
“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 Swiss franc
Both the Japanese and Swiss currencies tend to be bought as safe-havens during times of uncertainty.
Trump was already at the centre of a major stir on trade this week.
On Monday, he said he would hit Brazil and Argentina with import 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.
The latest Trump comments on the prospects for a Sino-U.S. trade deal underline the gulf on trade and other issues between the world’s two biggest economies.
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 97.768, having skidded to a one-month low.
For a graphic on World FX rates in 2019, click http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-CURRENCIES-PERFORMANCE/…
(Reporting by Stanley White; Editing by Sam Holmes & Shri Navaratnam)