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Yen Hikes as Investors Strengthen Optimism Over US-China Trade Agreement

The yen grew on Tuesday as some traders strengthened their optimism about the possibilities for a quick decision to the U.S.-China trade battle, which boosted so-called threat-off trades.

Global markets have been damaged, dramatic twists in the trade conflict this month. U.S. President Donald Trump on Monday signaled the possibility of a trade agreement with China, days after both sides introduced additional tariffs.

The greenback came under further pressure against the yen as a drop in U.S. Treasury yields confirmed some traders still favored the security of government debt.

The forex market also took some relief from a stronger-than-anticipated daily yuan fixing by the People’s Bank of China, which many investors considered an attempt to slow the yuan’s decline in opposition to the greenback.

While Washington and Beijing have shown a readiness to return to the negotiating desk to resolve their trade war, there are lingering concerns about a lack of a transparent path toward resolving a conflict that has continued for over a year and hampered global progress, corporate profits and investments.

The yen, which is usually bought in times of economic dilemma, also surged around 0.6% against the Australian and New Zealand dollars.

The greenback index =USD measuring the greenback versus a bucket of six leading currencies was little modified at 98.011.

Benchmark 10-year U.S. Treasury yields dropped to 1.5249% in Asia. The yield curve was modified as 2-year yields exchanged at 1.5326%, which is usually considered an indication of an imminent economic recession.

On Monday the dollar bounced from near eight-month lows of 104.46 yen after some signs of rapprochement between China and the US soothed traders’ nerves.

Nina Sanders

By Nina Sanders

Nina is the lead of the Currency column. She had joined the group as a part-time writer in 2006, covering the stock market, startups, earnings, and economy. Nina completed her Bachelors of Arts degree from the University of California specializing in Journalism and Geography.