AFP/Getty Images
The Chinese yuan on Monday tumbled to its lowest level since Christmas as the U.S.-China trade battle intensified.
The offshore yuan USDCNH, +0.9335% fell to an intraday low at 6.9184, and in most recent trade, a single dollar fetched 6.9088 yuan.
Trade talks between the U.S. and China ended with no deal on Friday, with President Donald Trump defiant on Twitter over the weekend, claiming the U.S. is in an advantageous position after boosting tariffs Friday on $200 billion of Chinese goods to 25% form 10% and threatening to put levies on the full range of Chinese goods.
Beijing on Monday moved to retaliate, announcing tariffs as high as 25% on $60 billion of Chinese goods, further escalating tensions between the world’s two largest economies.
What are analysts saying?
“Despite constructive spin from both sides, we remain pessimistic near term. Indeed, rhetoric from both sides over the weekend suggest things will get worse before they get better,” wrote analysts at Brown Brothers Harriman, referring to the U.S.-China trade negotiations.
USD/CNHHaven currencies roar higher
The Japanese yen and Swiss franc, but considered haven assets, surged on Monday.
The yen USDJPY, -0.58% climbed to ¥109.31 from ¥109.95 late Friday in New York, its highest level since Feb. 1, while the Swiss franc rose 0.6%, with a single dollar grabbing 1.0063 francs.
The move toward haven-related assets came as U.S. equities tumbled lower on Monday. In afternoon trade, the Dow Jones Industrial Average DJIA, -2.53% dropped more than 720 points, at its low, the S&P 500 SPX, -2.55% and Nasdaq Composite Index COMP, -3.51% also skidded lower.
“So far the sell-off has been orderly and is removing some of the froth in equity markets,” wrote Cliff Hodge, director of Investments for Cornerstone Wealth.
“Investors should keep any eye on yields and the U.S. dollar for clues on the future direction of the market. If the DXY breaks higher, the reflation trade orchestrated by central banks will be at risk.”
Read: Here’s how hard the escalating tariff fight will hit the global economy
Meanwhile, the Australian dollar AUDUSD, -0.7573% fell 0.7% versus the buck to $0.6950.
As China is Australia’s main trading partner, the Australian dollar is sensitive to trade headlines, and investors have also been betting on an interest-rate cut from Australia’s central bank, given weak economic data.
Read: Australian housing finances falls in March
The ICE U.S. Dollar Index, DXY, -0.01% a measure of the greenback’s strength versus six trading rivals, was a little lower at 97.271.
Elsewhere, the euro EURUSD, -0.0089% was unchanged at $1.1235, while the British pound GBPUSD, -0.2846% fell to $1.2965 from $1.3003 late Friday.
Read: Larry Kudlow contradicts President Trump on a critical aspect of the trade war
Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.
