The Japanese yen climbed on Tuesday in Asia on safe-haven appeal as investors’ risk appetite was hurt after the U.S. Justice Department announced charges against China’s Huawei Technologies Co Ltd with fraud.

Acting Attorney General Matthew Whitaker confirmed during a press conference that the Justice Department is seeking the extradition of Huawei’s CFO Meng Wanzhou from Canada.

The charges came ahead of high-level trade talks between China and the U.S. this week, which are set to begin on Wednesday. China’s Vice Premier Liu He will meet with a U.S. delegation led by Trade Representative Robert Lighthizer in Washington.

“There is a much lesser chance now that we get anything positive out of these trade negotiations,” said Nick Twidale, chief operating officer at Rakuten Securities in a Reuters report.

“This is likely to be bad for risky assets such as stocks and we expect the dollar/yen and Australian dollar to be under pressure,” Twidale said.

The USD/JPY pair edged up 0.1% at 109.30 by 11:18 PM ET (04:18 GMT).

The news did not seem to have any impact on the Chinese yuan, as the USD/CNYpair traded near flat at 6.7434.

The U.S. dollar index that tracks the greenback against a basket of other currencies was little changed at $95.40, as traders remained cautious ahead of the Federal Reserve’s two-day meeting. Many Fed watchers expect the U.S. central bank to stand pat on interest rates on Wednesday and tout a more dovish stance on monetary policy.

Investor attention will likely be focused on Fed Chairman Jerome Powell’s news conference and the central bank’s ongoing balance sheet reduction program. Powell’s news conference will follow the release of the Fed decision.

The Wall Street Journal reported Friday that the central bank is close to halting its balance sheet trimming program.

Meanwhile, the Australian Dollar slipped against the U.S. dollar on Tuesday amid a very gloomy assessment of current conditions from Australian businesses.

The National Australia Bank’s business conditions index plunged to 2 in December from 11 in November. The long-term average is 6.

The AUD/USD pair fell immediately following the release of the data but is now off its intra-day lows. The pair last traded at 0.7160, down 0.2%.


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