The Chinese yuan fell to its lowest level since early January on Monday after the U.S.-China trade talks hit a wall over the weekend, heightening fears of a full-blown trade war.
The offshore yuan USDCNH, +0.7216% traded to an intraday low at 6.8217 versus the greenback, its lowest level since Jan. 11, down as much as 1.4% on the day.
In most recent trade, a dollar was grabbing 6.7840 yuan, down 0.7%.
USD/CNH
Read: U.S. stock futures sink as threat of full-blown trade war re-emerges
What’s moving markets
President Donald Trump said on Sunday that tariffs on $200 billion of Chinese goods would increase to 25% from 10%, citing a lack of progress on the trade negotiations front.
“The market got Trumped again — Trump tweeted threats to raise tariffs on Chinese goods next Friday, when trade talks were set to resume on Wednesday. Chinese officials now say they are thinking of canceling the talks entirely,” wrote Marshall Gittler chief strategist & head of education at ACLS Global.
Read: ‘Art of the Deal’ or a serious breakdown in trade talks? Stocks point to the latter
Biggest movers
Traditional risk-related currencies are the biggest movers in early Monday trade. The Japanese USDJPY, -0.15% hit an 8-week high against the dollar at ¥110.28 as investors flocked to haven-related assets.
“Risk aversion is the name of the game on Monday, with investors diverting funds away from riskier assets like stocks and towards safe havens such as the Japanese yen, amid fears that the US-China trade conflict is ready to re-escalate,” wrote Marios Hadjikyriacos, investment analyst at XM.com.
In most recent trade, a single dollar fetched ¥110.77 compared to ¥111.10 late Friday.
Elsewhere, the Australian dollar and New Zealand dollar fell sharply as traders exited carry trade positions. The Australian dollar AUDUSD, -0.4414% slumped through 70 cents and was trading at 0.6987 and the kiwi NZDUSD, -0.4667% was off 0.5% at 0.6615.
A carry trade is owning a high-yielding currency and funding it with a low-yielding currency like the Japanese yen or Swiss franc.
Read: China stocks drop 5.5%, leading Asia markets lower as U.S.-China trade deal appears in jeopardy
Majors
The ICE Dollar Index, DXY, +0.09% which measures the value of the buck versus major trading partners, was unchanged at 97.568.
The euro EURUSD, -0.0536% was unchanged at $1.1201.
The British pound GBPUSD, -0.5997% fell sharply, trading to $1.3101 versus $1.3174.
Read: Wall Street’s ‘fear gauge’ set to jump by the most in more than year as Trump tariff talk roils stock market
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