FOREX-Aussie, yuan fall after White House adviser says China deal 'over'

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, June 23 (Reuters) - The Australian dollar, the
Chinese yuan and other risk-sensitive currencies tumbled on
Tuesday after White House trade adviser Peter Navarro said the
trade deal with China is "over".
Although there were few details on actual policy
implications, his comments resurrected fears that already tense
relations between United States and China may now worsen and
disrupt supply chains and capital flows.
Navarro linked the breakdown in part to Washington's anger
over Beijing's not sounding the alarm earlier about the
coronavirus outbreak. The Australian dollar lost 0.5% to $0.6874 AUD=D4 , erasing
earlier gains while the New Zealand dollar fell 0.65% to $0.6440
NZD=D4 .
The offshore Chinese yuan dropped 0.35% to 7.0815 per dollar
CNH= .
"It's not clear exactly what is over, but today's market
reaction suggests that after riding on optimism on the economy,
markets are now ready to test the pessimistic side of the story"
said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank,
referring to Navarro's comments.
Until early Tuesday, risk currencies had been supported and
the dollar had been soft as markets clung to hopes of an
economic recovery from the pandemic despite rising infections in
some parts of the world.
Traders bought into riskier bets as some big cities in North
America, such as New York and Toronto, eased lockdowns and
reopened their economies, though that came against setbacks
elsewhere in the fight to contain the coronavirus.
The World Health Organization (WHO) reported a record
increase in global novel coronavirus cases on Sunday, with
spikes in infections in southern and western U.S. states as well
as Brazil.
Against a basket of currencies .DXY , the dollar gained
0.16% to 97.189.
The safe-haven yen was little moved, stuck at 106.96 yen per
dollar JPY= . The euro slipped a tad to $1.1252 EUR= .
Investors are now looking to European business activity
surveys due later in the day.
Economists expect the euro zone composite flash PMI to rise
to 42.4 in June from 31.9 last month as European economies
gradually reopen.