Australian dollar near 4.5-month peak on positive risk sentiment; pound shaky.
- Australian dollar held firm near a 4.5 month peak on optimism about the US-China trade relations.
- Optimism on U.S.-China trade supported other risk currencies.
- British pound near 3-week low on fresh Brexit concerns
On Tuesday, the Aussie held firm near a 4.5month peak on optimism about the US-China trade relations.
The GBP was defensive as worries about a chaotic Brexit resurfaced.
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The Aussie gained $0.069295 in early trade, up 0.12% within striking distance of its Dec. 13 peak of $0.6939- its highest level since late July.
The currency has gained over 1% in the past four sessions.
On Monday, China said it would lower tariffs on products ranging from frozen pork, avocado, and some types of tech products come 2020. China also looks to boost imports amid its slowing economy and trade war with the U.S.
“It is possible to view this news as supporting the Aussie dollar. But considering that the Aussie has been strong since last Thursday, we should probably think that it reflects waning concerns over geopolitical risks,” said Tohru Sasaki, head of research at J.P. Morgan.
Other risk-sensitive currencies were also generally well-supported.
The New Zealand dollar stood at $0.6626, just below a five-month high of $0.6639 hit on Monday, while many emerging market currencies, including the Mexican peso, the Indonesian rupiah, and the Russian rouble, held near multi-month peaks.
The sterling slipped to 3-week lows
The GBP slipped to three-week lows as the market braced for more uncertainty after the U.K. officially leaves the European Union in January.
Boris Johnson has made it illegal to extend trade talks with the E.U. beyond the end of next year. Investors are fretting that the country could crash out without any trade deal.
On Tuesday, other major currencies moved little in holiday-thinned trade.
The euro stood almost flat at $1.1094 while the yen changed slightly at 109.37 yen per dollar.
The dollar index stood at 97.645, off Monday’s high of 97.820.
The dollar showed a limited response to a soft reading in new orders for key U.S.-made capital goods.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, edged up just 0.1% in November, slightly below market expectations.
U.S. capital expenditure is likely to stagnate in the coming months after Boeing announced last week it would suspend production of its best-selling 737 MAX jetliner following two fatal crashes of the now-grounded aircraft.
The firm’s failure to resolve its crisis led it to oust Chief Executive Dennis Muilenburg on Monday.