The safe-haven yen climbed and the yuan slid on Monday after U.S. President Donald Trump threatened to increase tariffs on China, sending riskier assets into a spin and slamming stock futures.
Trump on Sunday increased pressure on China to reach a trade deal by announcing he will hike U.S. tariffs on $200 billion worth of Chinese goods this week and target hundreds of billions more soon.
The announcement via Twitter marked a major shift in tone from Trump, who has cited good progress in trade talks and praised his relationship with Chinese President Xi Jinping.
The Wall Street Journal reported sources saying Beijing might cancel talks with their U.S. counterparts in Washington planned for Wednesday.
Investors responded by bidding up the yen, which is considered a safe harbor in times of stress given Japan's status as the world's largest creditor and its huge hoard of assets abroad.
The dollar eased to 110.65 yen on the WSJ report. Earlier it touched a five-week trough at 110.53 on Reuters dealing, after ending Friday around 111.12.
The market was again thin as Japan remains on holiday, though China is back from its break.
The euro hit its lowest since January around 123.44 yen and was last at 123.75. The single currency was steady on the dollar at $1.1185, while the dollar index was a fraction firmer at 97.548.
The dollar climbed 1 percent on the Chinese yuan to 6.8038.
Source : Reuters