May 13, 2019 / 1:46 PM / 10 days ago

FOREX-Yuan weakest since December as China introduces new tariffs

    * China retaliates with new tariffs against U.S. 
    * Concerns China will sell Treasuries hurts greenback

 (New throughout, updates trading and comments to U.S. market
open, new byline, changes dateline, previous LONDON)
    By Karen Brettell
    NEW YORK, May 13 (Reuters) - The Chinese yuan dropped to its
lowest levels against the U.S. dollar since December on Monday
as the trade war between the United States and China escalated,
with each country putting new tariffs on the other’s goods.
    China plans to impose tariffs on $60 billion worth of U.S.
goods, the finance ministry said on Monday, after the United
States announced a tariff hike on $200 billion of Chinese
products on Friday.
    U.S. President Donald Trump said Beijing "broke the deal" by
reneging on earlier commitments made during months of
negotiations while China said on Sunday it would not swallow any
"bitter fruit" that harmed its interests.

    The yuan weakened to as far as 6.91, its lowest level
since Dec. 24. China is expected to intervene to stop any plunge
through 7 against the dollar.
    Rising tensions between the two countries has also increased
fears that China may sell its vast holdings of Treasuries as
punishment or as a negotiation tactic against the United States.
    That hurt the greenback against safe haven currencies the
Japanese yen and Swiss franc as well as the euro.
    “They own a sizable chunk of Treasuries and that’s got the
market spooked a little bit and has got the dollar trading on
the defensive against some of the other major currencies,” said
Bipan Rai, North American head of FX strategy at CIBC Capital
Markets in Toronto.
    The euro may also benefit against the dollar as the eurozone
has a balance of payments surplus, and “in times of trade war
surplus currencies tend to do reasonably well,” Rai said.
    Investors are also focused on whether Trump will impose
tariffs on imported cars and auto parts as talks continue with
the European Union and Japan.
    Trump received a "Section 232" investigation report in
February, widely believed to have concluded that car and auto
part imports pose a risk to national security. The president's
90-day deliberation period is due to end on May 18.
    “The market is expecting that the Trump administration will
extend that deadline. If there is no indication that they will
you could see equities take a bit of a pounding this week,” Rai
said.
    
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    Currency bid prices at 9:31AM (1331 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1259        $1.1233     +0.23%         -1.83%      +1.1265     +1.1224
 Dollar/Yen       JPY=        109.0900       109.9400    -0.77%         -1.06%      +109.8400   +109.0700
 Euro/Yen         EURJPY=     122.83         123.52      -0.56%         -2.69%      +123.5300   +122.7700
 Dollar/Swiss     CHF=        1.0053         1.0116      -0.62%         +2.44%      +1.0117     +1.0054
 Sterling/Dollar  GBP=        1.3034         1.2999      +0.27%         +2.16%      +1.3040     +1.2992
 Dollar/Canadian  CAD=        1.3422         1.3412      +0.07%         -1.55%      +1.3453     +1.3417
 Australian/Doll  AUD=        0.6967         0.7000      -0.47%         -1.16%      +0.7002     +0.6962
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1321         1.1365      -0.39%         +0.60%      +1.1370     +1.1310
 Euro/Sterling    EURGBP=     0.8636         0.8636      +0.00%         -3.87%      +0.8645     +0.8623
 NZ               NZD=        0.6588         0.6597      -0.14%         -1.92%      +0.6605     +0.6573
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.7090         8.7121      -0.04%         +0.81%      +8.7625     +8.7099
 Euro/Norway      EURNOK=     9.8073         9.7863      +0.21%         -1.00%      +9.8387     +9.7901
 Dollar/Sweden    SEK=        9.6207         9.6113      +0.35%         +7.33%      +9.6637     +9.6174
 Euro/Sweden      EURSEK=     10.8333        10.7960     +0.35%         +5.55%      +10.8492    +10.8053
 
     

 (Editing by Susan Thomas)
  
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