The unexpected move in the long drawn-out dispute between the world's two largest economies renewed fears of a global slowdown and prompted a global sell-off in riskier assets. "Even though China's tariffs are smaller than what the US has imposed, the sudden surprise element of it all should cause a risk-off to asset markets globally," Iris Pang, economist, Greater China, ING, said in a note.
Latin American currencies, which fell more than 1%, were on course to record a fifth consecutive week of losses with Mexico's peso hitting eight-month lows.
Mexican gross domestic product was unchanged in the second quarter from the preceding three months, slightly weaker than a preliminary estimate, showing the economy was even closer to entering a recession in the first half of 2019 than previously anticipated.
Other regional currencies like the Brazil's real and Colombia's peso slid over 1%, despite a weaker dollar. MSCI's index of Latin American stocks shed nearly 3% with heavyweight Bovespa index falling more than 2%. Mexican stocks made the smallest losses. Argentina's peso, which shed nearly 18% last week, extended losses to record a sixth straight week of losses.