Dollar steadies as trade deal hopes dim

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The United states currency, dollar stabilised against a broad basket of other currencies on Tuesday after three consecutive days of losses.

Investors were awaiting the release of the minutes of the U.S. Central Bank meeting at end-October when policy makers had cut interest rates.

Global macro hedge funds had ramped up their dollar selling for a third week according to latest weekly positioning data and some market watchers say hawkish policy minutes could trigger a dollar rebound.

The greenback has hit a trough since late last week as hopes for a preliminary trade deal between the U.S. and China evaporated.

Expectations had grown that Washington and Beijing would sign a so-called “phase one” deal this month to scale back their 16-month-long trade war.

Those hopes received a setback on Monday after CNBC reported China was pessimistic about agreeing to a deal, which suggested a resolution to perhaps the biggest risk to the global economy remains elusive.

“Trade headlines are dominating sentiment but in terms of the key event risk, the release of the Fed minutes will be a big one for market participants,” Morten Lund, a Senior FX Strategist at Nordea said.

Against a basket of its rivals, the greenback was broadly steady at 97.84 after weakening more than 0.6 per cent in the last three sessions. It had hit a one-month high of 98.45 on Nov. 13.

Elsewhere in the currency market, the Australian dollar fell 0.16 per cent to 0.6799 dollar and declined 0.26 per cent to 73.82 yen.

Australia’s Central Bank “agreed a case could be made” for another cut in the 0.75 per cent cash rate at its November meeting given unwelcome weakness in wages growth and inflation, minutes published on Tuesday showed.

Sterling held firm around 1.2950 dollars with the Pound buoyed by polls, pointing to a victory by the ruling Conservatives in upcoming elections.

In the onshore market, the yuan fell to a two-week low of 7.0295 per dollar.

Peace PIAK