Early trade in New York: trade worries stoke safety bids for yen, Swiss franc

Anxiety about a global trade war spurred demand on Monday for the Japanese yen and Swiss franc, while the euro remained under pressure due to a dispute in Germany's governing coalition and the European Central Bank seen holding interest rates into 2019.
The dollar was supported by some safe-haven demand and signals from the Federal Reserve that it would increase overnight borrowing costs due to a tightening labor market and rising inflation. The ongoing trade dispute between the United States and China knocked the yuan to 6.4600 per dollar, its weakest in five months in the offshore market.
On Friday, the White House enacted tariffs on $50 billion in Chinese goods. Beijing quickly responded with a 25 percent levy on 659 US products, ranging from soybeans and autos to seafood.
"It's tough to say whether it will spiral further because it's so fluid. It does weigh on sentiment at times," said Eric Viloria, currency strategist at Wells Fargo Securities in New York. "Our base case is that there won't be a trade war."
The yen was up nearly 0.2 percent against the dollar at 110.45 yen and almost 0.3 percent higher versus the euro at 128.14 yen in early US trading.
The Swiss franc notched 0.3 percent increases against the greenback and the euro at 0.9946 franc and 1.1539 euros, respectively. The dollar was flat against the euro at $1.1605 after the Fed flagged more rate hikes are coming and the ECB signaled it will likely keep rates near a record low into the summer of 2019.
The euro has steadied after on Thursday suffering its biggest one-day drop against the dollar since Britain voted to leave the European Union two years ago.