Dollar edges up versus yen as U.S.-China trade war fears recede

Monday,   21-May-2018   09:08 AM (IST)

The dollar edged up against the yen on Monday, after U.S. Treasury Secretary Steven Mnuchin said the U.S. trade war with China is "on hold", boosting risk sentiment amid hopes for an easing of trade tensions between the world's two biggest economies.The dollar rose 0.2 percent to 110.99 yen in early Asian trade, nearing a four-month high of 111.085 yen that had been set on Friday.The easing of U.S.-China trade tensions is likely to underpin riskier assets such as equities and bodes well for the dollar against the safe-haven yen.Japan is the world’s largest creditor nation and traders tend to assume Japanese investors would repatriate funds at times of crisis, thus pushing up the yen. The Japanese currency often weakens when investor confidence increases and their appetite for riskier assets strengthens.The dollar's index against a basket of six major currencies set a fresh five-month high on Monday, touching a peak of 93.860 at one point.The euro slipped to $1.1744 at one point, touching its lowest level in five months, and was last down 0.2 percent on the day at $1.1747.Europe's single currency has dropped around seven cents in about a month amid a sharp dollar rally.A focus for markets this week is Wednesday's release of minutes from the Federal Reserve's latest monetary policy meeting. Investors will be watching the minutes for clues about the pace of the current tightening cycle.