Yen Gains 0.08% as Dollar Stays Flat, Markets Await US‑China Trade Resolution

The U.S. dollar slipped modestly against the Japanese yen on Tuesday, reflecting growing uncertainty over President Donald Trump’s recent optimism about a U.S.–China trade deal. After China announced it would hike tariffs on $75 billion of American goods, Washington retaliated by raising existing tariffs on $250 billion of Chinese products to 30 % from 25 % effective October 1.

Trump’s remarks on the sidelines of the G7 summit in France—claiming overnight contact with Chinese trade officials and a willingness to re‑enter negotiations—initially spurred a wave of risk‑on sentiment that lifted the dollar, weakened safe‑haven currencies and boosted equity markets. However, doubts emerged when a spokesman for China’s Foreign Ministry denied knowledge of the call, and the Commerce Ministry, which usually confirms such exchanges, did not respond.

Against this backdrop, the yen strengthened 0.08 % to 106.03, a modest rise compared with Monday’s 2‑½‑year high. The currency has already appreciated 3.3 % against the dollar this year, as traders flock to safe havens amid trade‑war volatility.

U.S. Treasury yields mirrored the risk‑off mood. The 10‑year yield fell to a low of 1.500 %, down from 1.513 %, while the 2‑year yield sat at 1.549 %, preserving an inverted curve that analysts warn could signal an impending recession.

The offshore Chinese yuan, highly sensitive to the trade dispute, steadied after a sharp dip to a record low of 7.1870 against the dollar the day before. It closed the session at 7.162. Global investor Mark Mobius cautioned that China is likely to continue a gradual depreciation of the renminbi, though it will seek to avoid a sudden collapse.

In Europe, the euro traded at $1.1097, easing from earlier lows as Italian stocks rallied on hopes of a new government forming without a snap election. The pound rose 0.43 % to $1.2266 and 0.46 % against the euro at 90.44 pence, buoyed by Labour leader Jeremy Corbyn’s pledge to prevent a no‑deal Brexit on October 31.

With trade‑war uncertainty still looming, markets remain cautious, and the yen’s steady climb underscores investors’ continued appetite for safe‑haven assets.