Shutterstock photo* Dollar/yen close to 16-month low set last week
* Canadian dollar seen most sensitive to trade war jitters
* Swedish crown hits 8-yr low on dovish Riskbank chief
By Jemima Kelly
LONDON, March 6 (Reuters) - The dollar edged down onTuesday, while the Canadian dollar traded close to aneight-month low on persistent worries about a trade war stemmingfrom U.S. President Donald Trump's proposed tariffs on importedsteel and aluminium.
Against the yen - traditionally seen as a safe haven - thedollar edged down 0.2 percent to slip below 106 yenJPY= , notfar from the 16-month low the greenback had slid to late lastweek after Trump announced plans to impose a hefty 25 percentlevy on steel imports, and 10 percent on aluminium.
Trump faced growing pressure on Monday to pull back from hisplans from political and diplomatic allies as well as U.S.companies, but he said he would stick to his guns. urn:newsml:reuters.com:*:nL2N1QN0H8
The dollar traded 0.1 percent lower on the day against abasket of six major rivals .DXY .
"The market has to work out what the trade wars mean for theU.S. dollar," said Rabobank currency strategist Jane Foley.
"While in the short term they might be seen asdollar-negative, there's an argument to say in the medium termit could be dollar-positive, because if growth really does slowdown, and moves out of emerging markets, then we could see asqueeze on liquidity and some positive dollar momentum."
However, Foley added that the spectre of trade wars wereunambiguously negative for the Canadian dollar, with Trump'sproposed tariffs on steel and aluminium - of which Canada is itsprime supplier - seen as a bargaining chip in talks to revampthe North Atlantic Free Trade Agreement (NAFTA). urn:newsml:reuters.com:*:nL2N1QN1SMurn:newsml:reuters.com:*:nL2N1QN0EL
The Canadian dollar traded down a quarter of a percent onthe day at C$1.2995 against its U.S. counterpart CAD=D3 , closeto an eight-month low of C$1.3002 set on Monday.
"The Canadian dollar is most affected by the step up intrade war rhetoric," wrote Commerzbank currency strategists in anote to clients.
"Tomorrow's BoC (Bank of Canada) rate meeting will bedecisive for the immediate Canadian dollar outlook: if, despitethe recent developments, the BoC keeps the door open for furtherrate hikes during the course of the year, the Canadian dollar islikely to be able to resist further notable depreciation," theyadded.
Sweden's crown slumped to a fresh eight-year low, after thegovernor of the country's central bank said it should not movetoo fast with normalizing monetary policy, or it could have anegative effect on the crown. urn:newsml:reuters.com:*:nL5N1QO1S4
The crown slipped 0.2 percent on the day to 10.2070 crownsper euro EURSEK=D3 , its weakest since February 2010.
The euro edged up 0.1 percent to $1.2347EUR= , havingrecovered from a brief selloff on Monday tied to Italy'sinconclusive weekend election. urn:newsml:reuters.com:*:nL5N1QN0KM (Reporting by Jemima KellyEditing by Raissa Kasolowsky)
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