• US dollar gains against Japanese yen
• Canadian dollar slides, euro under pressure
• Sterling at two-week low after UK economy shrinks in May
• Bitcoin at record high on renewed regulatory optimism
(Updates headline, first paragraph and prices throughouts, adds
new analyst comment)
By Saqib Iqbal Ahmed and Chibuike Oguh
NEW YORK, July 11 (Reuters) - The U.S. dollar rose
against major currencies including the yen and euro as President
Donald Trump rekindled trade tensions with new tariffs on Canada
and other trading partners.
Trump issued a letter late on Thursday that said a 35%
tariff rate on all imports from Canada would apply from August
1. The European Union was set to receive a letter by Friday.
The U.S. president, whose global wave of tariffs has upended
businesses and policymaking, floated a blanket 15% or 20% tariff
rate on other countries, a step up from the current 10% baseline
rate.
This week he surprised Brazil, which has a trade surplus
with the United States, with duties of 50%, and hit copper,
pharmaceuticals and semiconductor chips.
"There do appear to be some tariff jitters creeping in once
again after Trump floating the blanket tariffs yesterday,"
Michael Brown, market analyst at online broker Pepperstone in
London, said.
"Overall the moves that we have seen in the FX space are
relatively contained, and recent ranges seem to still be
respected for the time being," he added.
The U.S. dollar was up 0.79% to 147.4 against the Japanese
yen , on track to add nearly 2% for the week - the
biggest weekly gain since early December. It was flat against
the Swiss franc at 0.79695 franc.
The euro was 0.1% lower at $1.1688, after Trump said the
European Union could receive a letter on tariff rates by Friday,
throwing into question the progress of Brussels' trade talks
with Washington. Against the yen, the dollar was up 0.6% to
147.05 yen.
The Canadian dollar weakened against its U.S.
counterpart and was down 0.11% at C$1.3672, following a
knee-jerk fall of more than 0.5% after Trump unveiled the tariff
rate. The Brazilian real was 0.26% lower against the dollar.
The market reaction to the slew of new tariffs has been
largely muted compared to the manic sell-off that followed
April's "Liberation Day" announcement, but investors remain on
edge over the future of global trade and whether the August 1
deadline is final.
While the resurgence of tariff worries was helping support
the buck, some traders remained sceptical about the medium-term
outlook for the U.S. currency which has come under severe
selling pressure this year.
"My base case remains for a slow but steady USD depreciation
over the medium-term, but we have clearly already fallen a long
way, in a short space of time, so there is scope for a bit of a
rebound, especially if some of the more recent USD shorts begin
to get squeezed," Pepperstone's Brown said.
Also supporting the dollar were data suggesting labour
market resilience and minutes from the Federal Reserve's latest
policy meeting that tempered market expectations for imminent
interest rate cuts.
The dollar index is down nearly 10% so far this year,
on worries that data could soon reflect more widely the damage
U.S. policies have had on the world's largest economy. It
rose 0.28% to 97.85, on track to notch a weekly gain and snap
two consecutive weeks of losses.
"USD/CAD has kept most of its gains after a meaningful
knee-jerk rally on the announcement, but with those gains coming
from the Dollar leg, with cross/CAD generally close to flat
versus pre-announcement," Goldman Sachs analysts led by Stuart
Jenkins said in an investor note.
Elsewhere, sterling was down 0.54% at a two-week
low at $1.35050, as data showed Britain's economy contracted
unexpectedly for a second month running in May.
Cryptocurrencies saw a boost, driven by institutional
investor demand and crypto-friendly U.S. policies. Bitcoin
advanced 3.7% and scaled yet another record high of
$118,832, while ethereum jumped 5.9% to $2,987.15
"The ... new record reflects the resilience of global risk
appetite even in the face of Trump tariffs, as well as high
optimism over U.S. legislative proposals," DBS FX and credit
strategist Chang Wei Liang said.
He was referring to measures the U.S. House is set to
advance in its upcoming 'Crypto Week'.
G10 currency moves against the US dollar

(Reporting by Saqib Iqbal Ahmed and Chibuike Oguh in New York,
Rae Wee and Johann M Cherian; Editing by Christopher Cushing,
Clarence Fernandez, Joe Bavier, Andrew Heavens and Diane Craft)
((; @SaqibReports; +1 332 219
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