AtlantisFX | The yen gained ground against the US dollar on Tuesday as the recent escalation in the protracted Sino-US trade war underpinned demand for crisis-proof assets.
World markets were shaken by the developments in the trade dispute this month. US President Donald Trump claimed Monday that Chinese officials had called and offered to resume negotiations, a statement China did not want to confirm.
His comments helped limit heavy losses on the world's stock markets after both sides announced new tariffs on Friday. However, there is still concern that there is a clear path to resolving the dispute over which the outlook for the global economy has deteriorated.
The dollar was 0.37% lower at 105.02 against the yen at 10:02 CET.
The yen, which is readily bought in times of economic uncertainty, also rose by just over 0.6% against the Australian and New Zealand dollars respectively.
The US dollar index, which tracks the strength of the US dollar versus a trade-weighted basket of six other major currencies, fell 0.17% to 97.81.
The 10-year US Treasury yield fell to 1.51%. The yield curve reversed again so that biennial returns were a good 2 bps above the 10-year US yield counterpart, which is seen by economists as a harbinger of an impending economic recession.
China's onshore yuan fell to a new 11-month low. The reason for this was the mix of PBoC and the fears of market participants that the Chinese economy is particularly suffering from the ongoing trade dispute.
The euro has barely changed and was trading at $ 1,1106.
The British pound was trading at $ 1.2243, down 0.5% on Monday, as investors once again wondered whether British Prime Minister Boris Johnson had made progress on his project to ban the European Union from renegotiating the Brexit Convince agreement.
Johnson had stated on Monday that he was ready to negotiate the Brexit with the European Union until the last minute and that he would decide to exit if necessary without a transitional agreement.