Currency moves in response to the latest trade hostilities have been muted, but on Monday the yuan fell 0.8pc to 6.9040, its weakest since Dec. 27.

The yuan has fallen for six consecutive days and some analysts believe it will breach 7 per dollar in coming months, a level last seen during the global financial crisis.

China would probably use its vast currency reserves to stop any plunge through 7 to the dollar, which could trigger speculation and heavy capital outflows.

Investors bid up the yen, which is considered a safe haven in times of stress given Japan's status as the world's largest creditor and its huge hoard of assets abroad.

The yen was 0.25pc higher at 109.700 yen, near last week's three-month high of 109.470.

"Since demand for safe haven could exaggerate any gains in the yen, Japanese exporters could find themselves particularly disadvantaged in these circumstances.

We expect the yen to be trading in the region of 108 on a 12-month view," said currency analysts at Rabobank.

The world's two biggest economies appear deadlocked. Washington demands changes to Chinese law; Beijing says it won't swallow any "bitter fruit" that harms its interests.

President Trump and his Chinese counterpart Xi Jinping are likely to meet during a G20 summit in Japan at the end of June and discuss trade.

The Australian dollar shed 0.3pc to $0.6976.

A drop below $0.6960 would take the currency, already burdened by a dovish shift by the Reserve Bank of Australia, to its lowest since early January.

The Aussie is sensitive to shifts in risk sentiment and also serves as a proxy for trades related to China, Australia's largest trading partner.