Forex - Yen Gains against Dollar as Safe Haven Demand Revives

The U.S. dollar was hovering near two-week highs against a currency basket on Wednesday as renewed concerns over trade tensions and slowing global growth weighed on investor confidence, bolstering demand for the Japanese yen.

The U.S. dollar index against a basket of six major currencies was at 96.38 by 03:12 AM ET (07:12 GMT), not far from the highs of 96.45 scaled on Tuesday, the most since June 20.

The greenback was weaker against the safe haven yen, down 0.2% at 107.66, having been nudged off a 12-day high of 108.53 scaled at the start of the week.

At the G20 summit in Japan on Saturday, Washington and Beijing agreed to restart trade talks after U.S. President Donald Trump offered concessions.

But investors were wary about the chances of a resolution to the year-long trade war between the world's two biggest economies, especially given the recent breakdown in talks and Trump's comments that any deal would have to be tilted in U.S.'s favor.

Sentiment was also dented by Washington's threat of tariffs on $4 billion of additional European Union goods in a long-running dispute over aircraft subsidies.

Global growth concerns also weighed on investor confidence, with South Korea the latest trade-reliant economy to cut its economic growth and export targets, a day after weaker factory readings worldwide.

The euro was a touch lower at 1.1270 following a volatile session on Tuesday, when it swung between a low of 1.1275 and a high of 1.1322.

The common currency had received a lift after a media report that European Central Bank policymakers are in no rush to cut interest rates at a July policy meeting. But it later slipped after IMF managing director Christine Lagarde, perceived as a policy dove, was nominated as the next ECB president.

The British pound was also weaker against the U.S. currency, down 0.23% to 1.2562.

Bank of England Governor Mark Carney on Tuesday flagged uncertainties stemming from trade disputes and Brexit, prompting investors to increase their bets on central bank easing.

The Australian dollar was flat at 0.6988 after gaining about 0.4% the previous day. The Aussie had gained after the Reserve Bank of Australian cut interest rates but offered a more balanced outlook.