Breaking News
0

Dollar treads water ahead of Trump-Xi meet at G20 summit

ForexNov 29, 2018 11:43PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. U.S. dollar notes are seen in this picture illustration

By Vatsal Srivastava

SINGAPORE (Reuters) - The dollar trod water in nervous trade on Friday ahead of a meeting of U.S. and Chinese leaders that might, or might not, lead to a truce in the Sino-U.S. trade war, which would boost emerging market currencies at the expense of safe havens.

The greenback has been under pressure this week on growing expectations that the Federal Reserve would slow down its pace of monetary tightening, a view reinforced by comments on Wednesday from Chairman Jerome Powell.

Despite the dovish comments from Fed officials, there was no large scale dollar sell-off, partly due to the strength of the U.S. economy, weakening growth elsewhere, and dollar's own status as a safe haven amid the Sino-U.S. trade war.

It held steady Asian trade, with an index (DXY) measuring its value versus six peers up marginally at 96.72.

The focus is now on a planned meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires between Nov. 30-Dec. 1.

Trump kept markets nervous by sending mixed signals on Thursday about the prospects for a trade deal with Xi.

"If we see a truce, the Aussie and kiwi dollar will perform exceptionally well. We see a lot of upside in crosses such as Aussie/yen which would benefit from a risk on move," said Nick Twidale, chief operation officer, Rakuten Securities.

"If tariffs on Chinese imports stay at 10 percent, the dollar is likely to weaken in a risk-on move," he said.

Trump has said he plans to significantly hike the existing 10 percent tariffs on Chinese imports by January next year, which would sharply escalate the trade war between the economic heavyweights.

China's economy is already under pressure, with a survey earlier on Friday showing its vast manufacturing sector growth stalled for the first time in over two years in November as new orders shrank.

Apart from U.S.-Sino trade talks, the markets would also be focusing on whether OPEC and Russia agree on oil production cuts next week.

A meaningful rebound in crude prices can be beneficial for commodity currencies such as the Canadian dollar and Norwegian krone according to Michael McCarthy, chief markets strategist at CMC Markets.

Dollar investors were also carefully watching for any changes in U.S. monetary policy.

Overnight, minutes from the Fed's Nov. 7-8 meeting indicated that another interest rate hike is warranted. But Fed officials also kept the debate open on when the U.S. central bank might pause its monetary tightening and how it would relay those plans to the public.

The Fed is widely expected to raise interest rates by 25 basis points in December, which would be the fourth hike for the year.

For 2019, the market is now pricing only one rate hike, according to the CME Group’s FedWatch Tool, below Fed's projection of three increases during the year.

On Wednesday, Powell said the Fed's policy rate is now "just below" estimates of a neutral rate, which investors interpreted as a signal the Fed's three-year tightening cycle is drawing to a close.

However, some analysts think that the market may be underestimating the number of times the Fed can hike rates next year.

"We believe that Powell has not turned dovish but simply toning down his hawkish tilt. We expect a Fed hike in December and the US economy to keep performing and support another four hikes in 2019," said Philip Wee, currency strategist at DBS in a note.

The dollar weakened 0.07 percent versus the yen , which changed hands at 113.41 at 0350 GMT. Analysts expect the dollar/yen to remain in an uptrend due to the diverging monetary policies of the Fed and the Bank of Japan.

The euro (EUR=) was steady at $1.1390, having risen in the last two sessions as the dollar wobbled on Powell's comments.

Elsewhere, sterling traded at $1.2779, losing 0.1 percent versus the greenback. Traders remain bearish on the pound betting that British Prime Minister Theresa May will fail to win approval for her Brexit deal in a fractious parliament.

"No news is bad news for sterling. There's been no meaningful progress in Brexit negotiations and investors are growing impatient," said Kathy Lien, managing director of currency strategy at BK Asset Management in a note.

The Australian dollar lost 0.08 percent to $0.7315 on the weak Chinese PMI data.

Dollar treads water ahead of Trump-Xi meet at G20 summit
 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
Norbert Barigye
CryptoforChrist Nov 30, 2018 3:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Trade deal is far from achievement. Trump plans to impose a fresh tariff on Chinese goods. with the growing and escalating trade policy to boost production at home, Chinese imports will be taxed more. watch the space.
Reply
0 0
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email