TOKYO (Reuters) – The safe-haven yen edged higher and the Chinese yuan and Australian dollar dipped early on Monday after the latest escalation in the trade war between the United States and China.

The world’s two biggest economies appeared at a deadlock over trade negotiations on Sunday as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.

The trade conflict had escalated on Friday, with the United States hiking tariffs on $200 billion worth of Chinese goods. China has vowed to retaliate but has not given details.

“The conflict between the United States and China over trade is intensifying and the yen is gaining while the Chinese yuan and Australian dollar are retreating as a result today,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

“The overall reaction by currencies have been limited, however, as there are also factors that support hopes for an eventual settlement, such as the possibility of the two countries’ presidents meeting at the G20.”

U.S. President Donald Trump and his Chinese counterpart Xi Jinping are likely to meet during a G20 summit in Japan at the end of June and discuss trade, White House economic adviser Larry Kudlow said on Sunday.

The dollar was 0.3 percent lower at 109.650 yen, near a three-month low of 109.470 brushed late last week.

The Chinese yuan weakened about 0.3 percent to 6.866 per dollar in offshore trade, its lowest in four months.

The Australian dollar shed 0.15 percent to $0.6990. The currency is sensitive to shifts in risk sentiment and also serves as a liquid proxy of trades related to China, the country’s largest trading partner.

The dollar lost 0.1 percent to 1.010 Swiss francs, a safe haven along with the yen, after going as low as 1.009 on Friday, its weakest in nearly a month.

The euro was little changed at $1.1234.

The dollar index against a basket of six major currencies inched down 0.05 percent to 97.283.

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