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Safe-havens in demand as equity markets skid again

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Yen climbs, Swiss franc scales 6-month top on dollar

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Yuan slides as U.S. set to raise China tariff to 104%

By Wayne Cole

SYDNEY, April 9 (Reuters) - The dollar lost ground to

the safe-haven yen and Swiss franc on Wednesday as the imminent

imposition by the U.S. of 104% tariffs on China spooked world

equity markets and sent the Chinese yuan to record lows.

President Donald Trump showed no sign of backing away from

the new increase of 50% on China, which goes into effect in just

a few hours, accusing Beijing of manipulating the yuan to offset

the levies.

"If that goes ahead, you may as well kiss goodbye to any

last, lingering hopes that the U.S. economy might avoid a deep

recession," said Chris Weston, head of research at broker

Pepperstone.

"The message from the White House appears to be this - the

beatings will continue until morale improves."

The dollar has already reached an all-time top on the yuan

offshore at 7.4288, breaching the previous high at

7.3765, and all eyes are on China's central bank to see whether

it allows a further easing at its daily fix.

Worries about a U.S. downturn were pressuring the dollar

elsewhere as markets returned to pricing in more rate cuts from

the Federal Reserve.

Fed fund futures jumped in early Asian trade to

imply around 111 basis points of cuts this year, compared to 92

basis points early on Tuesday.

Fresh losses in U.S. stock futures and heavy selling in

longer-dated U.S. Treasuries sparked demand for safe haven

currencies, notably the yen and Swiss franc.

"Our top FX expression is to be long yen given U.S.

stagflation fears, exacerbated by Trump's aggressive reciprocal

tariffs and tit-for-tat escalations, and the sharp selloff in

equities," wrote analysts at Nomura in a note.

"Beyond the yen's relative safe-haven status, Japan's macro

backdrop remains relatively strong and rate differentials are

expected to continue to favour JPY."

The dollar lost 0.7% to 145.23 yen, heading back

toward the recent six-month trough of 144.55. The yen was also

up sharply on a range of high-yielding currencies as investors

unwound carry trades.

The dollar touched a fresh six-month low on the Swiss franc

at 0.8430, threatening major support at 0.8374.

The euro also edged higher, helped by reports Germany's

conservatives had reached a deal with the centre-left Social

Democrats to form a government, easing political concerns in the

EU's largest economy.

The single currency added 0.4% to $1.0996,

creeping back to last week's peak at $1.1147.