Dollar strengthens vs yen on Chinese ministry comments

Thursday,   07-Nov-2019   02:42 PM (IST)

The dollar gained versus the yen on Thursday after comments from a Chinese commerce ministry spokesman about the terms of a possible trade deal prompted investors to dump perceived safe-havens such as the Japanese currency. The Chinese commerce ministry said that China and the U.S. must simultaneously cancel some existing tariffs on each other’s goods for both sides to reach a “phase one” trade deal. The proportion of tariffs cancelled must be the same, and how many tariffs should be cancelled can be negotiated, said the spokesman. The dollar jumped up to near three-month highs versus the yen, retracing its 0.3% losses from earlier in the session, as investors interpreted the comments as positive news, reducing demand for safe-haven currencies.  Hopes for a trade deal had been waning after a senior official of the Trump administration told Reuters on Wednesday that a meeting to sign the deal could be delayed until December and that a venue had not yet been agreed. China’s offshore yuan strengthened past the key 7 per dollar level, touching its strongest level in three months, which it also reached on Tuesday. The Australian and New Zealand dollars - proxies for risk which had been weakening due to uncertainty surrounding the possible trade deal - also gained on the comments with the Aussie up 0.2% versus the dollar.  The United States and China have imposed tariffs on each other’s goods in a 16-month long trade war that rippled across financial markets, slowed global investments and growth. Investors hope a preliminary trade agreement rolls back at least some of the tariffs, but negotiations between Washington and Beijing have been fractious, making an agreement far from certain. The euro was up 0.1% against the dollar, having hit three-week lows after positive U.S. data.