FOREX-Yen, dollar buoyed as investors seek safety

* Argentina selloff, Hong Kong protests rattle markets
* Analysts predict more yen strength in months ahead
* Euro weakens, German inflation data as expected
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tommy Wilkes
LONDON, Aug 13 (Reuters) - The Japanese yen remained near
seven-month highs on Tuesday and the U.S. dollar rallied, as
investors unnerved by the Sino-U.S. trade war, protests in Hong
Kong and a crash in Argentina's peso currency sought safety.
Investors have flocked to the yen amid an escalating trade
war between China and the United States and worries about a
global economic slowdown. The Japanese currency, along with the
dollar and Swiss franc, is a safe haven in times of uncertainty.

The yen got a fresh boost from growing unrest in Hong Kong
and surprise election results in Argentina that led to a rout in
the country's currency, the peso, and stocks and bonds.
ING analysts said the yen was benefiting "from the best of
both worlds", pointing to general risk aversion and a rush to
price in more interest rate cuts by the Federal Reserve. They
think the yen will rally to 102 or 103 per dollar later this
year.
U.S. Treasury yields have declined steadily recently, and
the spread between U.S. and Japanese benchmark 10-year yields
has shrunk to its narrowest since November 2016.
The yen was unchanged by 0720 GMT at 105.32 JPY=EBS per
dollar. It reached 105.05 on Monday, a seven-month high and,
excluding the January flash crash, its strongest since early
2018.
The dollar rose 0.2% against a basket of other currencies,
its index reaching 97.563 .DXY .
The euro weakened 0.2% to $1.1196 EUR=EBS . German
inflation data in line with forecasts did little to support it.
The offshore Chinese yuan 7.104 after the People's Bank of China set a midpoint rate at an
11-year low that was still stronger than expected A senior official at the People's Bank of China told Reuters
on Tuesday that the yuan was at an appropriate level

Argentina's peso ARS= lost roughly 15% to 52.15 per dollar
on Monday after brushing a record low of 61.99 Fears of a possible return to interventionist policies, and
by extension a possible debt default, gripped the market after
conservative Argentina President Mauricio Macri lost in
presidential primaries by a margin much wider than expected
Commerzbank strategist Antje Praefcke said that the reaction
elsewhere to the Argentine primary result was a "sign of just
how jittery markets are".
Sterling slipped 0.2% to $1.2052 GBP=D3 , near the $1.2015
it touched on Monday, its lowest in more than two years, as
fears of a no-deal Brexit dominated trading.

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