Dollar edges lower amid trade uncertainties

on Dec 5, 2019
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  • The dollar edged lower against its rivals as Trump sends mixed messages tempering with hopes for a trade deal
  • Markets rebound following Bloomberg's report that the two sides were moving closer to a deal.
  • Major currencies muted their movements.

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On Thursday, the dollar edged lower against its rivals as Trump sends mixed messages tempering with hopes that the U.S. and China would soon reach a trade deal.

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On Wednesday, Trump said trade talks with China were going on “very well”. He sounded a more positive outlook compared to Tuesday when he said he had no deadline in mind, and the deal could come after U.S. Presidential election in Nov 2020.

His Tuesday’s comments raise prospects of a long extension of the trade war between the two largest economies in the world. 

His remarks hit market sentiments.

Markets rebound

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On Wednesday, markets rebound following Bloomberg’s report that the two sides were moving closer to a deal.

I thought the markets had stopped playing headline ping- pong on trade, but evidently not,” said Ray Attrill.

Ray Attrill is the head F.X. strategist at the National Bank of Australia.

Another day, another reversal of what happened the previous day,” Ray added.

If China and the U.S. do not reach an agreement soon, then Dec 15 is the next important date. It’s when the U.S. intends to impose more tariffs on Chinese goods.

Major currencies muted their movements. 

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The safe-haven yen was stable at 108.86 per dollar by 7:56 GMT.

The Swiss franc moved up to 0.9879 per dollar.

The euro moved higher against the dollar at 1.1083, which pushed the U.S. Dollar index down 0.1%.

Data in the eurozone showed that German factory orders unexpectedly dropped in October. The drop indicated that the manufacturing sector in the bloc’s largest economy is struggling to pull out of a more than year-long slump.

The GBP touched fresh eight-month highs, buoyed by the expectations that the PM Boris Johnson would win a majority at next week’s election. The win will pave ay for Britain to leave the E.U. on Jan 31.

Currency traders are now paying attention to the closely-watched U.S. non-farm payrolls report due Friday. The report will help them determine how well the U.S. economy is holding up amid a global slowdown.

The Aussie dropped to 0.6843 after softer-than-expected retail sales data.

The NZD was ta 0.6536 after rising as high as 0.6562 overnight- its strongest since Aug.

A rebound in domestic business sentiments boosted the kiwi this week as expectations for monetary easing have diminished.

On Thursday, the Reserve Bank of New Zealand lifted bank capital requirements. But not as much as some investors had feared. With long lead time, reducing expectations that monetary easing would be needed to offset the hike’s tightening effects.

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