The U.S. government has widened its trade blacklist to include some of China's top artificial intelligence start-ups, punishing Beijing for its treatment of mostly Muslim minorities and ratcheting up tensions ahead of high-level trade talks in Washington this week.
The Australian dollar, a global risk barometer, was last up 0.3pc at $0.6744 and the New Zealand dollar rose 0.4pc to $0.6319.
China's yuan was up 0.5pc at 7.1308 against the dollar in the offshore trading.
The euro was up 0.3pc at $1.09785.
The index that tracks the dollar against a basket of six other currencies was down 0.1pc at 99.007.
"Risk is looking reasonably better, but anyone who is trading the trade war knows that the impact of good news will be fading," said Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets.
"I think it pays off to be sceptical in terms of expectations of something exceptional happening during the U.S.-China trade talks this week," Stretch said.
The biggest move in the foreign exchange market, however, was an early morning plunge in the Swedish crown, both against the euro and the dollar ,on concerns the U.S.-China conflict over trade and foreign policy was nowhere near a resolution and was increasingly damaging the global economy.
Sweden's open economy makes the crown vulnerable to global growth dynamics and therefore to the trade dispute between the world's two biggest economies, which has hurt growth in the two years since U.S. President Donald Trump ignited the trade war.
The Swedish crown was last steady, after falling earlier to a 10-year low of 10.9230 against the euro and a 17-year low of 9.9639 against the dollar .
"It's a remarkable move," said Stephen Gallo, European head of FX strategy at BMO Capital Markets.
"You cannot get a clearer trend here. The fall reflects deepening worsening global outlook."
Gallo expects the crown to fall to 11 against the common currency, close to levels not seen since the financial crisis. Sweden's competitiveness as an exporter led to the crown's decline, he said.
The euro was a sell against the dollar, though, since it was likely to maintain its status as a safe-haven currency and U.S. investors were likely to keep their dollars at home, he added.
Chinese Vice Premier Liu He is due to arrive this week in Washington for trade talks. He is expected to meet U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Thursday.