Peoples Bank of China officials verbally prop up yuan amid trade tensions

Peoples Bank of China officials verbally prop up yuan amid trade tensions

The peso firmed as much as 2.6 percent overnight, by far the biggest gainer among Latin American currencies.

Both the yuan and Chinese equity markets have been on edge ahead of July 6, when USA tariffs on $34 billion worth of Chinese goods take effect.

Officials in China, the epicenter of the worldwide trade row, have warned the United States that the tit-for-tat tariffs on each others' goods will ultimately prove detrimental for American businesses and jobs.

Prospects of a full-blown trade war and relentless yuan weakening - it has fallen 5 percent in the past two weeks and is near 11-month lows - reportedly forced China into intervention via state-run banks.

"It's a crucial day for the yuan today given it weakened past 6.7 per dollar", said Mr Ken Cheung, a senior Asian FX strategist at Mizuho Bank in Hong Kong. "It generates a degree of instability in the market simply by virtue of its scale".

Over in Seoul, losses on the Kospi steepened through the day, with the index falling 2.35 percent to end at 2,271.54. The index closed lower by 0.27 percent at 6,177.80, with consumer stocks and gold producers recording the steepest declines.

"The big driver behind US resilience is that tech has been strong", said Rory McPherson, head of investment strategy at asset manager Psigma.

Still there are particular fears for Shanghai, which has plunged more than 20 percent from its January high as the colossal Chinese economy shows signs of slowing, even before Donald Trump's threatened tariffs kick in Friday.

LaVar Ball speaks out on LeBron, Lonzo
The most interesting storyline for the Lakers may be how die-hard fans of James co-exist with die-hard Lakers fans. So far, the Lakers appear to be unwilling to part with their young players like Kyle Kuzma in a potential deal.

Also on Monday, Washington moved to block China Mobile from offering services to the USA telecommunications market, recommending its application be rejected because the government-owned firm posed national security risks.

Oil prices climbed after Libya declared force majeure on some of its supplies, with Brent crude rising 0.8 percent to $77.93 per barrel and West Texas Intermediate (WTI) crude was up 1.1 percent to $74.77 a barrel.

Shanghai rose 0.4 percent and Singapore lost 0.2 percent, while Tokyo ended 0.1 percent lower.

That helped MSCI's world index to rise 0.25 percent, inching further off 2-1/2 month lows hit last week.

Trump told the World Trade Organization on Monday that "we'll be doing something" if the United States is not treated properly, just hours after the European Union said that USA automotive tariffs would hurt its own vehicle industry and prompt retaliation. "After all, nothing has been resolved on the Sino-US trade disputes".

"Basically (the flat curve) is saying the underlying growth in the US economy may not be as strong as the high short-term interest rates might warrant", McPherson said.

Investors are awaiting the publication on Thursday of minutes from the Federal Reserve's June meeting, and Friday's U.S. jobs data, for validation of policymakers' forecasts for two more rate hikes this year.

Currency moves were largely limited, however, with a public USA holiday in the United States discouraging traders from taking out big positions, not least until there is some clarity about where an escalating trade dispute between the US and China is headed and whether Europe will be dragged in.

Related Articles