US dollar slips vs yen after Trump threatens more tariffs on China

[SINGAPORE] The US dollar fell against the yen on Friday after US President Donald Trump said he had instructed US trade officials to consider US$100 billion in additional tariffs on China.

The simmering US-China trade spat has stirred concerns about its impact on global trade and economic growth, and financial markets remain sensitive to any fresh developments on this front.

Mr Trump said in a statement on Thursday that further tariffs were being considered "in light of China's unfair retaliation" against earlier US trade actions that have roiled global markets.

That gave a boost to the yen, a safe haven currency that attracts demand in times of economic uncertainty and vice versa.

The dollar fell 0.2 per cent to 107.15 yen, pulling away from a one-month high of 107.49 yen set on Thursday, when it was bolstered by a rebound in US shares.

While the US dollar's drop against the yen has been fairly tame so far, the move could deepen, especially if Japanese and US equities come under more pressure, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

"If the market starts to view this as a grave situation, I think we'll see the yen rise while equities are likely to weaken."

For now, market participants are waiting to see more details of Mr Trump's push for new tariffs on China, Mr Okagawa added.

In equity markets, Japan's benchmark Nikkei average was up 0.1 per cent on the day, while US S&P futures were down 1.1 per cent in Asian trade.

As the yen edged higher, the euro eased 0.1 per cent against the Japanese currency to 131.27 yen.

Against the US dollar, the euro edged up 0.1 per cent to US$1.2252 .

Besides the China-US trade issue, currency traders will also be looking for cues from US jobs data and comments by Federal Reserve chairman Jerome Powell later on Friday.

REUTERS