- China's move on rare earths stokes anxiety over trade
- Major currencies hold steady even as global yields fall
- Risk aversion hits emerging market, commodity currencies
- Canada dollar hits 5-month low after BOC holds rates
- Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates market action, changes byline and dateline, previous LONDON)
The dollar stayed firm on Wednesday, as investors focused on socking their money into bonds and gold - and to a lesser extent the yen and Swiss franc - with no end in sight in the trade tension between China and the United States.
Investor jitters intensified after the People's Daily newspaper, owned by China's ruling Communist Party, said Beijing was ready to use rare earths for leverage in its trade dispute with the United States. "Don't say we didn't warn you," it added in a strongly worded commentary.
The wave of risk aversion sent sovereign bond yields tumbling across the world. Benchmark U.S. Treasury yields US10YT=RR fell to their lowest levels since September 2017 while New Zealand bond yields tumbled to a record low. ]
Fears about a trade war between the world's two biggest economies spurred selling in emerging market currencies such as the South African rand ZAR= and Brazilian real BRL= and commodity-sensitive currencies including the Australian and New Zealand dollars AUD= NZD= .
"Most of the risk aversion that's coursing through markets is being felt by the Aussie, Kiwi and emerging markets," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "Big majors (are) little changed as key supports hold for now."
At 11:17 a.m. (1517 GMT), an index that tracks the greenback against the euro, yen, sterling and three other currencies .DXY was 0.24% higher at 98.187, holding below a two-year high of 97.908 reached last week.
The Chinese yuan CNY=CFXS softened to 6.9130 per dollar, not far from 5-1/2 month lows.
Benchmark 10-year Treasury yields US10YT=RR fell to 2.219% earlier Wednesday, the lowest since September 2017, while yields on 10-year New Zealand government debt NZ10YT=RR touched 1.730%, the lowest level since at least 1985.
Gold prices XAU= rose on the day's safe-haven move, gaining 0.2% to about $1,282 an ounce.
The greenback was little changed against the yen JPY= and the Swiss franc CHF= at 109.36 yen and 1.0078 franc per dollar, respectively.
The euro was a tad weaker against the Japanese and Swiss currencies at 121.695 yen and 1.1217 france, respectively.
Major central banks have not signaled an imminent policy easing to counter business slowdown stemming from the Sino-U.S. trade conflict.
The Bank of Canada on Wednesday left interest rates unchanged at 1.75% on expectations growth has picked up in the second quarter following a deceleration in the previous quarter. It did acknowledge increasing risks from global trade tension.
The Canadian dollar CAD=D4 reached a five-month low of C$1.3547 after the BOC rate decision.
Still, traders reckoned policy-makers would relent. Interest rate futures implied they believe the U.S. Federal Reserve would lower key lending rates by year-end.
======================================================== Currency bid prices at 11:18AM (1518 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1126 $1.1160 -0.30% -2.97% +1.1173 +1.1128 Dollar/Yen JPY= 109.3700 109.3600 +0.01% -0.80% +109.4600 +109.1600 Euro/Yen EURJPY= 121.71 122.04 -0.27% -3.57% +122.2000 +121.7000 Dollar/Swiss CHF= 1.0081 1.0075 +0.06% +2.72% +1.0082 +1.0050 Sterling/Dollar GBP= 1.2621 1.2652 -0.25% -1.06% +1.2671 +1.2619 Dollar/Canadian CAD= 1.3525 1.3490 +0.26% -0.82% +1.3546 +1.3481 Australian/Doll AUD= 0.6909 0.6922 -0.19% -1.99% +0.6931 +0.6909 arEuro/Swiss EURCHF= 1.1222 1.1244 -0.20% -0.30% +1.1252 +1.1210 Euro/Sterling EURGBP= 0.8816 0.8819 -0.03% -1.86% +0.8832 +0.8798 NZ NZD= 0.6507 0.6541 -0.52% -3.13% +0.6552 +0.6507 Dollar/DollarDollar/Norway NOK= 8.7683 8.7218 +0.53% +1.50% +8.7749 +8.7128 Euro/Norway EURNOK= 9.7605 9.7366 +0.25% -1.47% +9.7770 +9.7312 Dollar/Sweden SEK= 9.5789 9.5958 -0.46% +6.86% +9.6144 +9.5553 Euro/Sweden EURSEK= 10.6630 10.7120 -0.46% +3.90% +10.7253 +10.6634 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Major currencies YTD http//tmsnrt.rs/2I3cK4Y^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
