The dollar rose against the yen on Tuesday as fears over a simmering trade spat between the U.S. and China eased after Chinese President Xi Jinping promised to lower import tariffs.
Speaking at the Boao Forum for Asia, Xi said that China would lower import tariffs on vehicles, encourage imports and strengthen the protection of intellectual property.
Xi also said that a Cold War mentality, zero-sum thinking, and isolationism was out of place in today’s world and only peaceful development and cooperation could bring results.
The remarks helped soothe investor jitters over the ongoing tit-for-tat tariff dispute, which investors had feared might escalate into a full blown trade war between the world’s top two economies.
USD/JPY was up 0.27% to 107.07 by 03:18 AM ET (07:18 AM GMT) after rising as high as 107.25 overnight.
The safe haven yen, which tends to be sought out by investors during times of political or economic uncertainty, had gained in the previous two sessions.
Losses in the yen were held in check amid geopolitical concerns. Markets fear that U.S.-Russia relations could deteriorate amid heightened tensions in the wake of a suspected chemical weapons attack in Syria.
The risk sensitive Australian and New Zealand dollars were higher, with AUD/USD rising 0.38% to 0.7726 and NZD/USD advancing 0.48% to 0.7341.
The euro was almost unchanged with EUR/USD last at 1.2322, not far from Monday’s one-week high of 1.2330.
The single currency was buoyed up on Monday after European Central Bank President Mario Draghi said the declines in stock markets this year has not materially impacted euro zone financial conditions, indicating that policymakers are not overly concerned about the recent market volatility.
The euro was also higher against the yen, with EUR/JPY up 0.29% to 131.92.
Sterling was steady, with GBP/USD last at 1.4148.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged up 0.09% to 89.60 after ending the previous session down 0.28%.
