By Shinichi Saoshiro
TOKYO (Reuters) - The dollar was steady against the safe-haven Japanese yen on Friday, taking in stride the hike in U.S. tariffs on Chinese goods that went into effect and awaiting resumption of talks between top officials of the world's two largest economies.
U.S. President Donald Trump's tariff increase to 25 percent from 10 percent on $200 billion of Chinese goods kicked in on Friday, and Beijing said it would strike back, increasing tensions as the two sides pursue last-ditch talks to try salvaging a trade deal.
U.S. and Chinese officials will return to the negotiating table later on Friday.
"The tariff hike going into effect wasn't a surprise in itself," said Shusuke Yamada, chief Japan FX and equity strategist at Bank Of America Merrill Lynch.
"The market is now waiting to see if the two sides reach a compromise, continue with their brinkmanship or whether the negotiations fall through altogether."
The dollar stood little changed at 109.720 yen .
The U.S. currency, which slipped to a three-month low of 109.470 overnight, has lost 1.2 percent against the yen this week.
"The dollar is clearly on a downtrend against the yen, both in terms of technicals and flows," said Yuki Ishizuki, senior currency strategist at Dalian Securities.
But as the market had been bracing for the U.S. tariff increase, and given underlying demand for greenbacks Japanese institutional investors, "the dollar may not have much further room to fall," he said.
Against the Swiss franc, the dollar was a shade weaker 1.0140 after dropping roughly 0.5 percent the previous day, when it touched a one-month low of 1.0122 francs.
The yen and franc tend to attract demand in times of market turmoil and political tension.
The euro added 0.15 percent to $1.1229 after touching a one-week peak of $1.1251 the day before.
The dollar index against a basket of six major currencies, of which the euro is a main component, was little changed at 97.353 .
The index had slid to 97.238 on Thursday, its lowest since May 1, as U.S. Treasury yields declined as investors shied away from risk, weighing on the dollar this week.
The Australian dollar , sensitive to shifts in risk sentiment, was up 0.05 percent at $0.6990 after reaching as high as $0.7019. The Aussie was down 0.5 percent for the week, during which it brushed a four-month low of $0.6960.