FOREX-Yen firms as risk appetite fades; pound fragile

*
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, Aug 29 (Reuters) - The Japanese yen edged higher on
Thursday, heading for its biggest monthly rise since May as risk
appetite remained on the back foot with investors sceptical on
the prospect of a trade-war breakthrough any time soon.
"Investors are still concerned about the trade war and there
is little optimism we will see a substantial breakthrough in
negotiations," said Esther Maria Reichelt, an FX strategist at
Commerzbank.
U.S. President Donald Trump's administration on Wednesday
made official its extra 5% tariff on $300 billion in Chinese
imports and set collection dates of Sept. 1 and Dec. 15.
Against the greenback JPY=EBS , the yen edged 0.2% higher
at 105.83 yen. For the month, it is set to gain 2.5% against the
dollar, putting it on track for its biggest monthly rise in
three months.
"It's very difficult to take on any kind of major risk in
this environment," said Chris Weston, head of research at forex
brokerage Pepperstone Group, pointing to the inverted yield
curve as an indicator of sentiment.
Spreads between 10-year U.S. Treasury debt and comparable
two-year bond yields inverted to minus 3 bps, its lowest since
May 2007.
Sterling remained in the spotlight after Prime Minister
Boris Johnson's plan to suspend parliament raised the odds of a
no-deal Brexit. GBP/ The British currency GBP=D3 edged a
quarter of percent lower at $1.2183, approaching a January 2017
low below $1.2015.
China's onshore spot yuan CNY=CFXS eased slightly to be
weaker for an 11th straight session, although a
firmer-than-expected central bank fixing helped stem deeper
losses. Against a basket of currencies .DXY , the dollar was
steady around 98.190.
Elsewhere, the kiwi NZD=D3 was off 0.3% at $0.6318, after
touching its lowest since September 2015 at $0.6311.