Investing.com -- The dollar rose to its highest level in nearly a month in early trading on Friday, enjoying continued support from tentative signs of rapprochement in the trade war with China ahead of the long Labor Day weekend.
The dollar made some of its strongest gains against the safe haven Swiss franc, which has also lost ground against the euro this week amid continued suggestions that the Swiss National Bank is quietly intervening to counteract the effect of safe haven inflows into the franc from investors spooked by the trade war.
At 4 AM ET (0800 GMT), the US Dollar Index, which tracks the greenback against a basket of developed market currencies, was at 98.528, up around 0.1% from late Thursday and just off a four-week high of 98.55. Against the euro, it was up 0.2% at $1.1037.
The euro was struggling after comments on Thursday by incoming European Central Bank President Christine Lagarde hinted that there will be little immediate change in policy direction when she takes over from Mario Draghi in November. Lagarde said the ECB hadn’t yet reached the lower bound for interest rates, a consensus view in Frankfurt, but Deutsche Bank (DE:DBKGn) strategist Jim Reid said she sounded marginally more concerned about the side-effects of negative interest rates for banking profitability than Draghi.
The Chinese yuan stabilized around the 7.14 level in the absence of anything substantial to back up the trade optimism that ran through markets on Thursday.
“We don't think China is about to acquiesce without the U.S. removing a lot of existing tariffs and holding off from new ones, and the U.S. needs a big concession from China on IP and openness, or it too will appear weak,” said ING’s chief economist for Asia, Robert Carnell, in a blog post.
Elsewhere, sterling weakened further against both the dollar and euro as the noise over Boris Johnson’s suspension of parliament refused to die down, albeit without generating any concrete new initiatives.
And in emerging markets, the Hungarian forint recovered a touch after hitting a new all-time low on Thursday as the country’s central bank left open the possibility of a first interest rate cut since 2016. By 4 AM, the euro was at 331.30 forint, down from as high as 331.52 on Thursday.