LONDON: The Japanese yen was set for its biggest monthly rise since May on Friday as risk appetite remained on the back foot with investors sceptical of a breakthrough in the US-China trade war any time soon.

"Investors are still concerned about the trade war and there is little optimism we will see a substantial breakthrough in negotiations," said Esther Maria Reichelt, an FX strategist at Commerzbank.

US President Donald Trump's administration on Wednesday made official its extra 5% tariff on $300 billion in Chinese imports and set collection dates of Sept. 1 and Dec. 15.

Against the greenback, the yen edged 0.2% lower to 106.28 but was on track for a 2.5% rise against the dollar for the month of August, its biggest such rise in three months.

The dollar firmed broadly against its rivals after China said it won't immediately retaliate against the latest round of tariff increases by the United States.

Against a basket of currencies, the dollar rose slightly to 98.29.

Spreads between 10-year US Treasury debt and comparable two-year bond yields were at minus 3 bps, the lowest since May 2007.

Sterling remained in the spotlight after Prime Minister Boris Johnson's plan to suspend parliament raised the odds of a no-deal Brexit. The British currency edged quarter of percent lower to $1.2183, approaching a January 2017 low below $1.2015.

China's onshore spot yuan eased slightly, weaker for an 11th straight session, although a firmer-than-expected central bank fixing helped stem deeper losses.

Elsewhere, the kiwi was off 0.3% at $0.6318 after touching its lowest since September 2015 at $0.6311.