* 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
(Adds details and quotes, updates prices)
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 0.16% at 108.286 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 0.05% higher at $1.1227 EUR= after retreating
0.3% on Wednesday. The single currency has brushed a 1-1/2-month
high of $1.1307 this week, during which the greenback has
suffered significant losses.
The dollar index against a basket of six major currencies
.DXY stooped to a two-month low of 96.749 midweek as benchmark
U.S. yields declined sharply this week to 21-month lows on
investor risk aversion and heightened prospects of the Federal
Reserve cutting interest rates.
"With little hopes for resolution in the U.S.-China trade
conflict and Brexit, a prospective Fed rate cut has emerged as a
key potential catalyst for the currency market," said Daisuke
Karakama, chief market economist at Mizuho Bank in Tokyo.
The dollar index was little changed at 97.309 after managing
to edge up 0.25% the previous day, when it found some traction
following four days of losses.
TROUBLE MOUNTS FOR PESO
The Mexican peso, already saddled with trade concerns, took
a hit after credit ratings agency Fitch downgraded its sovereign
debt rating on Wednesday by a notch from BBB plus to BBB, just
two notches above junk status. Fitch said the financial woes of state oil company Pemex
were taking a toll on Mexico's prospects. The ratings agency
also said Mexico's mounting trade tensions with the United
States influenced its view.
In a further blow for Mexico, Moody's changed the country's
outlook to negative from stable.
The Mexican peso MXN=D4 was down 0.8% at 19.7489 per
dollar, edging back towards a five-month low of 19.8800 brushed
on Monday.
(Editing by Sam Holmes and Jacqueline Wong)