FOREX-Yen edges up on U.S.-Mexico trade woes; ECB in focus

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* U.S., Mexico unable to reach agreement on tariffs, yen
edges up
* Already wobbly Mexican peso hit as Fitch cuts credit
rating
* Immediate market focus on ECB policy decision later on
Thursday

By Shinichi Saoshiro
TOKYO, June 6 (Reuters) - The yen edged up versus the dollar
on Thursday as sentiment soured over U.S.-Mexico talks on
tariffs and immigration, fuelling broader concerns about global
trade hostilities and raising appetite for safe-haven
currencies.
Mexican officials met with their U.S. counterparts for
negotiations in Washington on Wednesday aimed at averting U.S.
tariffs on Mexican goods next week, although there were no
immediate signs of a rapprochement. In a move that could deepen Washington's trade conflict with
its partners, U.S. President Donald Trump unexpectedly told
Mexico last week to take a harder line on curbing illegal
immigration or face 5% tariffs on all its exports to the United
States.
The dollar was down 0.15% at 108.300 yen JPY= , handing
back a bulk of the gains made overnight.
The greenback was supported earlier on Wednesday on initial
optimism towards U.S.-Mexico trade talks, and an Institute for
Supply Management (ISM) survey showing that U.S. services sector
activity expanded at a brisk pace in May. "The dollar had risen against the yen earlier on speculation
that the U.S.-Mexico negotiations would produce positive
results, but headed back down on headlines saying an agreement
had not been reached," said Shinichiro Kadota, senior strategist
at Barclays in Tokyo.
"The focal point today will be on the ECB and how dovish
President Draghi could be."
The European Central Bank makes its monetary policy decision
later on Thursday. The central bank will try to give the ailing
euro zone a boost and may even set the stage for more action
later this year as an escalating global trade war unravels the
benefits of years of monetary stimulus. ECB President Mario Draghi is expected to maintain guidance
about the possibility of more stimulus.
The euro was 0.1% higher at $1.1230 EUR= after retreating
0.3% on Wednesday.
The Mexican peso, already saddled with trade concerns, took
a hit after ratings after credit ratings agency Fitch downgraded
its sovereign debt rating on Wednesday to BBB, nearing junk
status, while Moody's changed the country's outlook to negative
from stable. The Mexican peso MXN=D4 was down 0.85% at 19.7521 per
dollar, edging back towards a five-month low of 19.8800 brushed
on Monday.
The dollar index against a basket of six major currencies
.DXY was little changed at 97.300 after edging up 0.25% the
previous day, pulling away from a two-month trough of 96.749.
The dollar index had stooped to a two-month low as U.S.
yields declined sharply this week on investor risk aversion and
heightened prospects of the Federal Reserve cutting interest
rates.