The dollar rose against the yen on Tuesday after Chinese President Xi Jinping's promise to cut import tariffs eased concerns about a trade conflict and revived risk appetite, with Asian currencies hit hard in recent weeks also recovering.

The yuan, which has fallen this month, clawed back some of those losses with a modest gain, as did the Australian dollar, up as much as half a per cent.

Xi's speech

Speaking at a Boao Forum for Asia in Hainan province, Xi pledged to open the country's economy further and lower the import tariffs on products, including cars.

Xi, in his first public reaction to the tariff standoff, refrained from increasing the tension between Washington and Beijing, and appeared to give clear backing for open economies and against isolationist moves.

The dollar rose 0.3 per cent at 107.100 yen after going as high as 107.245. The greenback had fallen in the two previous sessions as rhetoric from Chinese and US policymakers had kept markets wary.

The euro rose to 132.035 yen, its highest since March 14.

“Xi explicitly did not continue the trade war rhetoric so this is going to be risk friendly and the market will be relieved,” said Kit Juckes, a macro strategist at Societe Generale.

Juckes said he expected high-yielding currencies, including the Australian dollar and the New Zealand dollar, to perform well as risk appetite returned.

“I very much doubt this will move the dollar significantly,” he said.

More broadly, the dollar traded flat against a basket of major currencies. It struggled to make much headway versus the euro as the single currency held on to Monday's rises above $1.23. The euro slipped slightly to $1.2315.

The common currency was lifted after European Central Bank President Mario Draghi had said on Monday that the slide in stock markets this year had not materially had an impact on euro zone financial conditions, suggesting policymakers remain calm about the recent market volatility.

Geopolitical concerns

With little crucial economic data due out on Tuesday, risk sentiment around geopolitical concerns is expected to drive currency markets.

“We have to keep in mind that Trump's protectionist, anti-globalisation stance won't change overnight. His aim is to win the 2020 elections and the markets are likely to be revisited by volatility soon,” said Daisuke Karakama, chief market economist at Mizuho Bank.

Syria attacks

Losses in the Japanese currency, which tends to rise in times of uncertainty and stress, were limited from tensions stemming from other perceived risks, notably Syria.

US President Trump on Monday promised quick, forceful action in response to a suspected chemical weapons attack in Syria, appearing to suggest a potential military response. Trump has castigated Russia for backing Syrian President Bashar al-Assad.

The Canadian dollar extended gains after rallying against the dollar overnight on higher oil prices and a business survey from the Bank of Canada that supported expectations for further interest rate hikes.

The loonie earlier reached C$1.2676 per dollar, its strongest since February 27.

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