Dollar slips against yen amid trade, political turmoil

US long-term bond yields rise during global market uncertainties

The US dollar dipped against the yen on Tuesday with simmering anxiety about higher US bond yields, the China-US trade war and political turmoil in Europe.

The yen extended gains against the greenback to a fourth straight session, coming off an 11-month low of 114.55 yen per dollar reached on Thursday last week.

“We have to pay close attention to the negative impact on stock markets of China’s economic outlook and long-term US interest rates,” said Kumiko Ishikawa, senior analyst at Sony Financial Holdings.

Over the past trading days, rising US long-term yields initially provided support to the dollar against the yen, but after that the mood on stock markets worsened, similar to what happened in February, according to Ishikawa.

The dollar shed 0.2 percent to 113.05 yen on Tuesday.

Against a basket of its rivals, the greenback was steady at 95.774, not far off a seven-week top of 96.127 hit last week.

Yields on the benchmark 10-year Treasury paper rose to a seven-year high of 3.252 percent, before retreating to 3.244 percent, while yields on 30-year Treasuries brushed a four-year peak.

The euro edged up to $1.1496, trading close to a seven-week low of $1.1457 reached during the previous session amid discord between Italy and the European Union over Rome’s budget plans.

Against the Japanese currency, the euro lost 0.1 percent to 130.00 yen.

The Chinese offshore yuan was slightly stronger on the day at 6.9160 yuan per dollar, trading not far off the key 7 level. However, it recovered somewhat after slipping about 0.35 percent overnight.

A senior US Treasury official said on Monday the US remains concerned about China’s recent currency depreciation.

“If the stimulus measures... by the Chinese authorities are regarded as positive for the Chinese economy, then it will support the renminbi,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.