The safe haven currency Japanese yen is strengthening against the US dollar on Thursday over the risk-off sentiment creeps back into markets as sources hint at the US-China trade deal signing being pushed beyond 2019 and into 2020. At the time of writing, USD/JPY is trading at around 108.51.

The Japanese yen found favor among traders as tensions between the US and China threaten to escalate over the political row regarding protests in Hong Kong. According to a report on Reuters, US President Donald Trump is likely to enforce laws in support of the anti-government protesters in Hong Kong, which could anger China further.

The uncertainty surrounding the “phase one” trade deal has been high lately as China tries to force the US into rolling back some of the tariffs before signing the deal. According to sources in the US government, Trump and US Trade Representative Robert Lighthizer are not keen on doing so over a limited trade deal which does not resolve key concerns of IP protection and forced technology transfers that started the trade war in the first place.

Positive comments from Chinese Vice Premier Liu He expressing optimism about the trade deal weakened the Japanese yen momentarily, but this move lasted briefly as tensions dominated the sentiment all over again. In case the deal gets delayed into 2020, the US will roll out the next round of tariffs against Chinese imports on December 15, which could drive further weakness in global financial markets.