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The dollar was mostly lower against other major currencies on Monday, as concerns over a possible trade war between the US and China continued.

The US dollar index, a measure of the greenback’s strength against a basket of currencies, was down by 0.3 percent to $88.83, after hitting a one-month low of 0.12 percent.

The currency gained 0.3 percent to 105.07 against safe-haven yen, after marking a 16-month low and its weakest since November 2016 of 104.56 on Friday.

Expectations that Japan’s political controversy could intensify also helped bolstered the yen. For the past few years, the yen has been pressured by economic policies known as, Abenomics created by Japan’s Prime Minister Shinzo Abe.

Any event that may weaken Abe’s support ratings is deemed as a negative factor to his ability to keep the measures in position. A key witness to the cronyism scandal involving the premier will be testifying in parliament on Tuesday.

The dollar meanwhile, lost 0.2 percent to 1.2868 against its Canadian counterpart, while it dropped 0.1 percent to 0.9458 against the Swiss franc.

Other high-earning currencies, including the Australian dollar and kiwi, climbed 0.4 percent to 0.7736 and 0.7 percent to 0.7288 respectively.

Australia is set to see its home sales data for the month of February, as well as a statement from the Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent on Tuesday.

Analysts stated that as long as Washington and Beijing continued their tit-for-tat trade war rhetoric and actions, safe-haven play is likely to strengthen the Japanese yen further.      

China Open to Conduct Trade Negotiations with the US

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China’s foreign ministry stated on Monday that it was open to negotiate with the US to settle their issues over trade, as fears continue to rise over a full-blown trade war between the two countries.

Concerns over a trade war stayed in play, after US President Donald Trump signed a memorandum last week declaring import tariffs on up to $60 billion of Chinese goods, but the proposal have a 30-day consultation period before it could take effect.

China immediately responded on Friday by announcing plans to impose tariffs on 128 US items with an import value up to $3 billion.

Sources familiar with the matter said China and the US have started discussing to improve US access to Chinese markets.

The dollar declined by 0.5 percent to 6.2785 against the Chinese yuan, following the report.

US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer reportedly wrote down measures that Washington wants China to carry out in a letter to newly appointed Vice Premier and administrator of China’s economy Liu He.

The steps requested by the US included a reduction of Chinese tariffs on US automobiles, more purchases of US-made semiconductors, and better access for US companies to China’s financial sector.

Mnuchin was believed to be considering visiting Beijing to continue trade talks. Sources also said Mnuchin and Liu He had talked about trade deficit between the two countries, and committed to continue conversing to determine a mutually agreeable way to cut it.

The Trump administration has called for China to immediately lessen its $375 billion trade surplus with the US by $100 billion.

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