Dollar steady amid optimistic signs on trade deal; Powell’s speech in focus

on Nov 26, 2019
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  • Dollar was stable against the yen amid positive signs the China and the U.S. would agree on an interim trade deal.
  • Investors were looking ahead of the U.S. trade data, consumer confidence, and house price figures in the trading day.
  • Powell's speech in focus as the dollar remains unchanged

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On Tuesday, the dollar was stable against the yen amid positive signs the China and the U.S. would agree on an interim trade deal.

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News that China’s Vice-premier and Chief trade negotiator- Liu He held a call with his U.S. colleague and that they both agreed on how to move forward in their disputes boosted market sentiments.

Global Times- the Chinese state-backed newspaper Tweeted on Monday that the two countries were close to a phase one deal, discounting the adverse media reports.

Initially, the dollar rose to a two-week high of 109.19 against the yen before settling back to 108.9 by 09:04 GMT. It remained below a one-week high at 98.19 against a basket of currencies. 

“The broad trend is the markets are looking for a deal because trade has been the biggest factor weighing on global growth and holding back confidence,” said Shane Oliver. 

Shane is the head of investment strategy and chief economist at AMP Capital Investors in Sydney.

The euro also remained steady against the dollar at 1.1014 maintaining above the one-week low of 1.1003 reached on Monday.

The GBP was lower, down 0.2% at 1.2871 after an opinion poll in the U.K. showed the opposition Labor Party had narrowed the Conservative’s lead ahead of Dec.12 election- fueling uncertainty over Brexit.

Investors were looking ahead of the U.S. trade data, consumer confidence, and house price figures in the trading day. But, overall, the currency trading is slowing down ahead of the U.S. Thanksgiving holiday on Thursday.

Powell’s speech in focus as the dollar remains unchanged.

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In Asia, the USD remained steady on Tuesday after the Fed Chair Jerome Powell hinted that the Fed was likely to hold rates steady.

The U.S. Dollar Index Futures was unchanged at 98.238 by 04:58 GMT.

Powell said in an overnight speech that the Fed was firmly committed to its 2% inflation goal. However, he noted that inflation had run well below that level for 2019 despite the three rate cuts over the past four months.

The Fed cut its benchmark rate another quarter-point to a range targeted at 1.5%-1.75% at its October meeting.

The USD/CNY pair dropped 0.1% to 7.0290.

The safe-haven yen dropped as Asian stocks gained today. The USD/JPY pair slightly moved up 0.1% to 108.96.

The GBP/USD pair changed slightly at 1.2894 after jumping in the previous session amid reports that British Prime Minister Boris Johnson promised to bring a Brexit deal to parliament before Christmas.

The AUD/USD pair rose 0.1% to 0.6781.

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