Wont devalue yuan to boost its exports amid trade war, says China

Trump blasts Fed, threatens to put tariffs on all Chinese goods

Trump blasts Fed, China and Europe for putting US economy at a disadvantage

The index posted a final reading of -0.5 in the prior month. All this could further exacerbate dollar strength.

Benchmark 10-year USA notes last fell 14/32 in price to yield 2.8968 percent, from 2.847 percent late on Thursday. On the downside, support is seen at 1.1671 (21-DMA), a break below could drag it till 1.1600.

The Bank of Japan has pursued an aggressive monetary stimulus to achieve its elusive 2% inflation target. "The threat that U.S. policies pose to global growth is considerable and the market will continue to react to presidential tweets and comments while they are coming thick and fast". FxWirePro's Hourly Yen Strength Index stood at 106.62 (Highly Bullish) by 1000 GMT. Reed Cavendish Wealth Management analysts say USA businesses based in China are concerned that such measures could mean increased inspections, delayed investment approvals or even consumer boycotts.

The pan-European FTSEurofirst 300 index lost 0.15 percent, amid rising trade tensions.

Threats and intimidation on trade will never work on China, its foreign ministry said on Monday, after US President Donald Trump said he was ready to impose tariffs on all $500 billion of imported goods from the country.

Japan's Nikkei stumbled 1.3 per cent while South Korea's Kospi index slipped 0.8 per cent.

Germany's DAX fell 0.2 percent at 12,535.71 points; France's CAC 40 trades 0.5 percent lower at 5,371.24 points. -China trade tensions and increased supply. Brent settled at $73.18, up 11 cents. United States crude was last off 14 cents at $68.12 a barrel after posting its third straight weekly loss. Rising rates threatens to increase the USA economy's debt burden, and a stronger greenback is forcing the U.S. to give up a competitive edge, according to President Trump, who stated his administration's policy objectives could be undermined by the Fed's actions. The onshore spot yuan opened at 6.7524 per dollar and was changing hands at 6.7585 at midday, 279 pips firmer than the previous late session close and 0.01 percent stronger than the midpoint. US gold futures for August delivery were almost unchanged at $1,231 an ounce.

Trump's criticism of currency manipulation by China and the European Union and media reports suggesting that the Bank of Japan is considering modifying its ultra-loose monetary policy also added to the dollar's weakness. -China trade war will further hurt output.

That sent the 10-year benchmark Japanese government bond yield to a six-month peak on Monday.

Highly liquid 10-year policy bank bonds issued by China Development Bank also saw a spike in yields, jumping 7 basis points to 4.2525 percent early on Tuesday.

As investors sold bonds, the country's stock markets moved higher on the prospect of policy easing.

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