* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, June 3 (Reuters) - The Swiss franc rallied to its
highest levels in nearly two years against the euro on Monday as
U.S. President Donald Trump hardened his trade stance to
countries beyond China, prompting investors to move into
perceived safe-haven currencies.
Trade tensions have grabbed centre stage for investors in
recent weeks after Trump increased tariffs on Chinese imports,
threatened to raise tariffs on Mexican imports and removed
preferential trade treatment for India. Rising strains on trade have prompted investors to dump
risky assets such as equities and flock to low-yielding
currencies such as the yen and the franc with the latter
flirting close to levels where the Swiss National Bank has
traditionally intervened to keep the currency weak.
"While the Swiss franc has appreciated strongly in recent
weeks, much of that gains is due to the wave of risk aversion
sweeping across markets and we need to see further substantial
gains before the central bank has to step in," said Manuel
Oliveri, a currency strategist at Credit Agricole in London.
Against the euro EURCHF=EBS , the franc rallied 0.2% to its
highest level at 1.1146 francs per euro after strengthening more
than 2% in May, its biggest monthly rise in eight months.
The Swiss National Bank, which pursues a monetary policy of
negative interest rates and currency intervention, has
traditionally intervened when the franc has risen to around 1.10
francs per euro but low inflation and trade tensions suggest the
franc has to gain far more from current levels.
Latest data indicate price pressures remain well contained
with consumer prices rising 0.6 percent in May from a year-ago
period. The franc wasn't the only low-yielding currency to shine,
with the Japanese yen also broadly gaining against a swathe of
currencies.
On Friday, the Japanese currency had booked its sharpest
daily rise in more than two years, climbing a little over 1.2%
during the session. It was up 0.2% versus the pound and 0.1%
against the euro on Monday.
A senior Chinese official and trade negotiator said on
Sunday Washington cannot use pressure to force a trade deal on
China and refused to be drawn on whether the leaders of the two
countries would meet at the G20 summit in Japan at the end of
the month to bash out an agreement. The dollar dipped after benchmark 10-year U.S. Treasury
yields US10YT=RR hit as low as 2.121% on Monday, their lowest
since September 2017.
Against a basket of six major currencies, the dollar was
slightly negative at 97.71 .DXY , though it is still up 1.6%
for the year.
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CHF and SNB intervention https://tmsnrt.rs/2WGm7kn
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