On Monday, the greenback held firm versus the yen, taking a break after its rally during the previous week, trading with care amid U.S. – China trade concerns.
The greenback ended trade at 106.32 yen, following its rise of over 1.5 percent last week marking the currency’s highest weekly gain since the month of September 2017.
The dollar’s gains versus the yen last week was mainly supported by indications that China and the U.S. are covertly in talks to avoid a full-scale trade war. Meanwhile, hopes are still up on the positive side on the perceived development North Korea issues.
The surge in risk appetite affected the yen as a safe haven, yen is considered as a currency that tends to standout in times of market unease and vice versa.
The dollar index ended trade at 89.971 in comparison to six other prominent currencies, taking a step back from a one-week peak of 90.178 hit last Thursday.
The United States 10-year Treasury yield last traded at 2.764 percent after a seven-week low 2.739 percent on Thursday.
However, with the U.S. – China trade tension taking the spotlight, some analysts say the greenback’s gains versus the yen may be cut short in the coming term.
China has imposed extra tariffs of up to 25 percent on United States products such as frozen pork, wine and certain nuts and fruits. This is China’s move in response to the Trump’s tariffs on aluminum and steel.
The said tariffs are expected to take effect on Monday. However, markets have not yet reacted to China’s announcement, partly because Beijing had already issued a warning regarding this matter, as stated by senior global market analyst at Sumitomo Mitsui Banking Satoshi Okagawa.