Dollar hovers near 3-1/2-week high amid cautious optimism on tariff rollbacks

Monday,   11-Nov-2019   11:48 AM (IST)

The dollar held near multi-week highs on Monday amid optimism that the United States and China would roll back tariffs that have hurt global growth. The dollar index against a basket of six major currencies stood flat at 98.323, just off its 3-1/2-week high of 98.404 touched on late Friday. Moves were slight as traders kept a wary eye for further news on the U.S.-China trade war. Officials from both countries said late last week that a rollback of some tit-for-tat tariffs had been agreed as part of a preliminary deal, that has still to be finalised, aimed at ending the trade war. Even though that was subsequently denied by U.S. President Donald Trump on Friday, he did not completely rule out a deal and U.S. benchmark treasuries held above a key support level at 1.9%, buoying the currency. Against the euro, the greenback was little moved at $1.1023, reflecting some investor caution that the deal could still unwind. Versus the Japanese currency, the dollar slipped 0.25% to 109.03 yen as some safe-haven buying kicked in on reports that Hong Kong police opened fire and hit at least one protester, a fresh escalation of violence as anti-government demonstrations enter their sixth month. The Chinese yuan weakened 0.19% at 7.0013 per dollar in offshore trade on fresh violence in Hong Kong, where police fired live rounds at protestors, with Cable TV and other media reporting at least one person being wounded. Disappointing economic data also hurt sentiment toward the yuan, as China’s producer prices fell the most in more than three years in October, National Bureau of Statistics (NBS) data showed on Saturday, while the country’s consumer prices rose at their fastest pace in almost eight years. The yuan’s decline on Monday followed five straight weeks of gains, the longest winning streak in nearly nine month, supported by rising hopes that the world’s two largest economies could strike a deal to de-escalate their trade tension. With the United States on holiday for Veterans Day, focus is likely to be on news headlines, British economic data due later on Monday and a rate-setting meeting of the New Zealand central bank later in the week. Britain’s economy has lost momentum this year, hurt by a global downturn due to the U.S.-China trade war as well as increased uncertainty over its exit from the European Union. It is forecast to have grown 0.4% for the quarter. The British pound, whose fate is now closely tied to the outcome of an election set for Dec. 12, edged a shade higher to $1.2792 in Asian trade.