The yen, often sought in times of political tensions and market turmoil, gained against a number of peers following the latest tariff news. The USD/JPY pair dropped to 110.85 by 12:30AM ET (04:30 GMT) after hitting a seven-week high of 111.355 yen earlier on Tuesday.
Meanwhile, the yuan retreated by the most in more than a week as the USD/CNY pair rose 0.6% to 6.6695, though it still kept some distance from 11-month low of 6.7344 touched last week.
“A key concern of China’s government is stability,” said Investec Bank’s economist Ryan Djajasaputra. “If the trade situation deteriorated and the yuan witnessed further downward pressure, we would expect the authorities to step in, particularly if there were signs of capital flight.
The Trump administration said on Tuesday that it would impose tariffs on an extra 200 billion worth of Chinese imports, raising concerns of a full-blown trade war between the world’s two biggest economies. The proposed list of goods includes consumer items such as clothing, television components and refrigerators as well as other technology products.
