Yen soaring, offshore yuan falls as trade war intensifies

TOKYO – The yen surged on Monday as investors flocked to safe haven assets after the sharp escalation of the China-China trade war, which shattered investor confidence and clouded the global economic outlook.

The yuan also fell in offshore trade, weighed down by expectations of a more pronounced slowdown in China as the world's two largest economies traded beards on trade.

The Swiss franc and gold, two assets sought during periods of high risk aversion, exploded in the first Asian trade.

Financial markets may face a difficult situation in the near future as investors risk transferring money to less risky assets such as debt, gold and safe haven currency.

"Speculators arrived early on the market to put strong pressure on the dollar / yen," said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities in Tokyo.

"The fact that the offshore yuan is down, shows that speculators have become a little wild.Commercial war is at the origin of all these movements, and I do not see it end so early."

The yen jumped to 104.46 to the dollar, its highest level since a flash crash in January, before reducing its gains to 104.70, up more than 0.5%.

The yen will then target 104.10 to the dollar, which is the highest reached during the January 3 stock market crash that rocked the financial markets, said Ishizuki of Daiwa Securities.

In the offshore market, the dollar rose 0.6% to 7.1550 yuan, the highest level ever recorded.

US stocks fell on Friday when President Donald Trump announced the adoption of additional 5% tariffs on $ 550 billion of targeted Chinese goods, just hours after Beijing's unveiling of retaliatory duties on products US $ 75 billion.

At the G7 meeting in France this weekend, Trump sowed confusion by stating that he had perhaps had doubts about the tariffs.

The White House clarified these remarks on Sunday, saying Trump would have wished to raise tariffs on Chinese products even higher last week, even as he reported that he was not planning to to respond to the request by the United States to close Chinese operations.

The yen also rose about 1% against Australian and New Zealand dollars.

The dollar fell 0.2% to 0.9729 Swiss francs.

Spot gold also rose 1.4% to $ 1,548.93 an ounce.