Currencies: Haven Currencies Bounce Higher As Trade Row Keeps Grips On Markets

Haven currencies, including the Japanese yen and Swiss franc bounced higher on Monday as the trade row between the U.S. and China remained in focus.

Trade tensions have been on the rise, with China vowing to retaliate against a U.S. round of tariffs by slapping duties on American export products, including crude oil, and suspending all previous trade agreements with Trump’s administration.

Read: Escalating U.S.-China trade spat comes at a bad time for global growth, economist says

Uncertainty over future relations between the two trade giants saw investors drop risky emerging market currencies and go for safer ones. Japan’s yen USDJPY, -0.18%  and Switzerland’s USDCHF, -0.2607%  both strengthened against their U.S. counterpart, with one dollar buying ¥110.45, down from ¥110.65 late Friday in New York, and 0.9942 francs, down from 0.9974 late Friday.

But the dollar index remained little changed. The ICE U.S. Dollar Index DXY, -0.04%  was last slightly up at 94.827, after logging a gain of just over 1% last week, according to FactSet. The broader WSJ Dollar Index BUXX, +0.07% was little changed in positive territory at 88.07.

“Traditional safe havens are naturally doing well this morning with gold up a couple of dollars and the yen in the green against the dollar, euro and pound,” said Craig Erlam, senior market analyst at Oanda.

The euro-yen pair EURJPY, -0.19%  was down 0.1% with one euro buying ¥128.27, according to FactSet.

Read: Here’s why trade-war fears trump the Bank of Japan when it comes to the yen

China’s yuan, which is pegged to the dollar and trades in a tightly defined range, slipped, with one dollar buying 6.4397 onshore yuan USDCNY, +0.1242%  , little changed but in positive territory, and 6.4578 offshore yuan USDCNH, +0.3558%  , up 0.3%.

Beyond trade issues, traders also kept global interest rate differentials on their minds, as the Bank of England is set Thursday to deliver its monetary policy update. The British pound, already stuck in a downtrend since April, is expected to be confined to lackluster trading in the lead-up to the policy meeting.

Don’t miss: Here’s how the ECB just breathed new life into the dollar rally, analysts say

“The key event of the week for the pound is the BOE meeting this Thursday. We expect the pound price action to be rather muted both going into the meeting and after it, given the likely fairly vague policy signal in the post-meeting statement,” ING analysts said in a note.

The British pound GBPUSD, -0.3238%  last traded at $1.3249 compared with $1.3280 late Friday.

RECENT NEWS

Gyrostat Capital Management: The Missing Allocation In Retirement Portfolio Construction?

For decades, retirement portfolios have largely been constructed using combinations of growth assets a... Read more

When The Gate Comes Down

A Stress Test Rather Than a ScandalApollo Debt Solutions is not a blow-up story. It is something arguably more instructi... Read more

What If The Investment Industry Is Benchmarking The Wrong Things?

  Investment management is built around benchmarking.  Fund managers compare themselves a... Read more

SpaceX Is Looks To Make History

The Biggest Bet in Wall Street History: SpaceX's $1.78 Trillion IPOThere are moments in financial history that stop you ... Read more

Gyrostat June Market Outlook: When Low Volatility Conceals Structural Risk

This monthly Gyrostat Risk-Managed Market Outlook does not attempt to forecast market direc... Read more

Why Low Volatility Is Not The Same As Low Risk

Why Low Volatility is Not The Same As Low Risk Some of the worst-performing portfolios in... Read more