June 18, 2018 / 2:15 PM / 3 months ago

FOREX-Trade worries stoke safety bids for yen, Swiss franc

    * Euro under pressure as ECB seen holding rates into H2 2019
    * Dollar steadies on trade tension, further U.S. rate hikes
    * Chinese yuan falls to 5-month lows in offshore market

 (Updates market action, changes dateline; previous LONDON)
    By Richard Leong
    NEW YORK, June 18 (Reuters) - Anxiety about a global trade
war spurred demand on Monday for the Japanese yen and Swiss
franc, while the euro remained under pressure due to a dispute
in Germany's governing coalition and the European Central Bank
seen holding interest rates into 2019.
    The dollar was supported by some safe-haven demand and
signals from the Federal Reserve that it would increase
overnight borrowing costs due to a tightening labor market and
rising inflation.
    The ongoing trade dispute between the United States and
China knocked the yuan to 6.4600 per dollar, its
weakest in five months in the offshore market. 
    On Friday, the White House enacted tariffs on $50 billion in
Chinese goods. Beijing quickly responded with a 25 percent levy
on 659 U.S. products, ranging from soybeans and autos to
seafood.    
    "It's tough to say whether it will spiral further because
it's so fluid. It does weigh on sentiment at times," said Eric
Viloria, currency strategist at Wells Fargo Securities in New
York. "Our base case is that there won't be a trade war."
    The yen was up nearly 0.2 percent against the dollar at
110.45 yen and almost 0.3 percent higher versus the euro
at 128.14 yen in early U.S. trading.
    The Swiss franc notched 0.3 percent increases against the
greenback and the euro at 0.9946 franc and 1.1539 euros
, respectively.
    The dollar was flat against the euro at $1.1605 after
the Fed flagged more rate hikes are coming and the ECB signaled
it will likely keep rates near a record low into the summer of
2019.
    The euro has steadied after on Thursday suffering its
biggest one-day drop against the dollar since Britain voted to
leave the European Union two years ago. 
    Tensions with the governing coalition in Germany also
weighed on the single currency. Chancellor Angela Merkel's
Bavarian allies may defy her by implementing a plan to limit
immigration at the German border and risk destabilizing her
three-month-old coalition.
    The dollar is "in a consolidation phase in the near term,"
Viloria said. "People are looking for economic data that show
more improvement outside the U.S."
 ========================================================
    Currency bid prices at 10:00AM (1400 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1602        $1.1607     -0.04%         -3.28%      +1.1624     +1.1566
 Dollar/Yen       JPY=        110.4300       110.6600    -0.21%         -1.99%      +110.7400   +110.3100
 Euro/Yen         EURJPY=     128.15         128.43      -0.22%         -5.20%      +128.6100   +127.8300
 Dollar/Swiss     CHF=        0.9946         0.9974      -0.28%         +2.08%      +0.9990     +0.9942
 Sterling/Dollar  GBP=        1.3239         1.3283      -0.33%         -2.02%      +1.3285     +1.3227
 Dollar/Canadian  CAD=        1.3190         1.3199      -0.07%         +4.87%      +1.3207     +1.3160
 Australian/Doll  AUD=        0.7437         0.7440      -0.04%         -4.67%      +0.7456     +0.7426
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1542         1.1576      -0.29%         -1.26%      +1.1574     +1.1539
 Euro/Sterling    EURGBP=     0.8762         0.8736      +0.30%         -1.36%      +0.8779     +0.8729
 NZ Dollar/Dolar  NZD=        0.6945         0.6948      -0.04%         -1.99%      +0.6956     +0.6921
 Dollar/Norway    NOK=        8.1415         8.1466      -0.06%         -0.80%      +8.1799     +8.1216
 Euro/Norway      EURNOK=     9.4488         9.4588      -0.11%         -4.06%      +9.4702     +9.4337
 Dollar/Sweden    SEK=        8.8313         8.7824      +0.48%         +7.68%      +8.8698     +8.7863
 Euro/Sweden      EURSEK=     10.2487        10.1997     +0.48%         +4.16%      +10.2788    +10.2000
   

    
 (Additional reporting by Tommy Wilkes, Saikat Chatterjee in
LONDON
Editing by Keith Weir and Dan Grebler)
  
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