Forex market turns cautious as Trump-Xi summit draws near
Safe haven yen claws to a week high vs the dollar and 4-1/2 month top against the euro
The safe-haven yen advanced to a one-week high against the dollar and a 4-1/2-month peak versus the euro on Tuesday, as investors grew cautious about a possibly contentious meeting between US President Donald Trump and Chinese President Xi Jinping.
Trump had vowed during his campaign to label China a currency manipulator on his first day in office.
While that has not happened, a report last week said the Trump administration was reviewing the scope of its power to penalise countries whose currencies it perceives as undervalued. The report provided no details about how that would be done.
“It’s always difficult to know what components of FX the two (Trump and Xi) will focus on or what specific measure they will be looking at in order to amp up the rhetoric on currency manipulator,” said Brad Bechtel, managing director FX at Jefferies in New York.
Markets also reacted to a bombing on Monday in a St. Petersburg metro and had an eye on US employment data due later this week and France’s presidential election later this month.
In late trading, the dollar was down 0.2 per cent to 110.64 yen, after earlier sliding to a one-week low of 110.27 yen.