FOREX-Mexican peso tumbles as Trump jolts markets with new tariffs, yen gains

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Trump to impose tariffs on all goods coming from Mexico
* Mexican peso slides to 3-month low vs dollar in reaction
* Safe-haven yen bought as global trade concerns escalate

By Shinichi Saoshiro
TOKYO, May 31 (Reuters) - The Mexican peso sank to
three-month lows against the dollar early on Friday after
Washington unexpectedly said it will slap tariffs on all goods
coming from its southern neighbour.
The safe-haven yen advanced as the Trump administration's
move to escalate its trade war with other countries further
shook already fragile risk sentiment in global financial
markets.
The Mexican peso MXN=D4 tumbled 1.85% to 19.4942 per
dollar after U.S. President Donald Trump said on Thursday the
United States will impose a 5% tariff on all goods coming from
Mexico starting on June 10 until illegal immigration is stopped.
At one point the peso weakened to 19.5950 per dollar, its
lowest since March 8.
The yen was up 0.25% at 109.335 per dollar JPY= and also
made gains against the euro and Australian dollar.
"The news on Mexican tariffs came just as the United States
is imposing tariffs on China, and the timing is stirring up the
markets," said Daisuke Karakama, chief market economist at
Mizuho Bank.
"Headlines related to trade issues come in short,
unpredictable bursts. Currency market reaction is therefore
quite intense, but also tends to be short-lived."
The dollar index against a basket of six major currencies
.DXY was flat at 98.147 after inching down the previous day,
when it snapped two straight sessions of gains amid a continuing
decline in U.S. yields.
The index was still headed for a 0.5% gain this week,
supported by weakness in peers such as the euro and sterling,
and the U.S. currency's own status as a safe-haven in times of
market and economic troubles.
The euro was steady at $1.1133 EUR= . The single currency
was down 0.65% this week.
The pound was effectively flat at $1.2613 GBP=D4 . Sterling
has lost nearly 0.8% this week, as the imminent departure of
Theresa May as prime minister deepened fears about a chaotic
exit for Britain from the European Union. (Editing by Shri Navaratnam)