FX round-up: Japanese yen jumps after US levies 10.0% tariff on remaining Chinese exports

The focus in foreign exchange markets on Thursday was on Asian currencies after the US President announced on his personal account on Twitter that in September, as the next round of negotiations got underway with China, Washington would "start" to impose a 10.0% levy on the remaining $300.0bn-worth of Chinese exports which had been exempt from trade tariffs up until now.

Arguing that his "friend Xi" had failed to carry through on promises to increase purchases of Chinese goods and crack down on exports of Fentanyl, Trump tweeted: "during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25% [...]."

In a statement issued overnight, the White House had described talks over the past week on "forced technology transfer, intellectual-property rights, services, non-tariff barriers, and agriculture" as "constructive".

The President's decision hit the US dollar especially hard in its cross against the Japanese yen, so that by 1919 BST it was changing hands 1.18% lower at 1.0749.

Australia's dollar on the other hand fell against the Greenback, shedding 0.6% to 0.6804.

Against that backdrop, Sterling was little changed on its main crosses, having trimmed earlier losses as traders digested the US Federal Reserve's decision overnight to push back on financial markets' pricing for interest rate cuts extending out into 2020.

Cable was drifting lower by just 0.06% to 1.21532 while versus the euro, the pound was slipping by 0.12% to 1.0966.

Earlier in the day, the Monetary Policy Committee had announced its decision to stay put on policy, although it did tone down its rate guidance.

Rate-setters shifted to saying that Bank Rate may have to rise "a bit more" in case of a Brexit deal, instead of repeating that it might need to rise by more than financial markets were anticipating.

On that note, in the August Inflation Report released alongside Thursday's policy decision, Bank marked down its projections for excess demand in the UK economy by the third quarter of 2020 from +0.25% and now envisaged excess supply of -0.25%.

Euro/dollar meanwhile was little changed, rising by just 0.07% to 1.1084, although it had reversed earlier losses.

From a bird's eye view, the US dollar spot index was down by 0.19% at 98.33.