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© Reuters. US dollar notes are visible in this illustration.
By Vatsal Srivastava
SINGAPORE (Reuters) – The US dollar has opened a nervous trade on Friday, in anticipation of a meeting of US and Chinese leaders that may or may not lead to a truce in the Sino-US trade war, boosting emerging market currencies spending. shelters.
The greenback was put under pressure this week by rising expectations of slowing monetary tightening by the US Federal Reserve, a view reinforced by Wednesday's comments from President Jerome Powell.
Despite dovish comments by Fed officials, there has been no mbadive sell-off of the dollar, partly because of the strength of the US economy, slowing growth elsewhere, and the dollar's status as a safe haven. of the Sino-US trade war.
Asian trade was stable, with an index () measuring its value against six competitors, up slightly to 96.72.
The focus is now on a planned meeting between US President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires from November 30 to December 10. 1.
Trump has worried the markets by sending mixed signals Thursday on the prospects of a trade deal with Xi.
"If we watch a truce, the US dollar will be exceptionally strong.We are seeing many increases in centers such as the Aussie / yen that would benefit from a risk in the event of a move," Nick Twidale said. , Director of Operations at Rakuten Securities.
"If tariffs on imports from China remain at 10 percent, the dollar should weaken if the risk is high," he said.
Trump has announced its intention to significantly increase current tariffs by 10% on Chinese imports by next January, which would significantly worsen the trade war between heavyweights in the economy.
The Chinese economy is already under pressure, a survey released Friday revealing the broad growth of its manufacturing sector slowed for the first time in more than two years in November, as new orders fell.
In addition to the US-Sino-US trade talks, the markets would also be asking if OPEC and Russia agree to cut oil production next week.
A significant rebound in crude prices may be beneficial for commodity currencies such as the Canadian dollar
Investors in dollars were also alert to any change in US monetary policy.
In the night, the minutes of the November 7-8 Fed meeting indicated that another interest rate hike was warranted. But Fed officials have also left open debate about when the US central bank could suspend its monetary tightening and how it would pbad these plans on to the public.
The Fed is likely to raise interest rates by 25 basis points in December, the fourth increase of the year.
For 2019, the market now expects only a rate hike, according to the CME Group's FedWatch tool, lower than the Fed's forecast of three increases over the course of the year.
On Wednesday, Powell said the Fed's key rate was now "just below estimates" of a neutral rate, which investors have interpreted as a sign that the three-year tightening cycle of the Fed coming to an end.
However, some badysts believe the market may underestimate the number of times the Fed can raise rates next year.
"We believe that Powell has not adopted the principle of dovish, but merely mitigated his hawkish attitude.We expect a rise in the Fed in December and the continued performance of the US economy, which will support four further increases in 2019, "said Philip Wee, foreign exchange strategist at the DBS. Note.
The dollar has weakened by 0.07% against the yen
The euro () remained stable at 1.1390 USD, after rising over the past two sessions as the dollar flickered under Powell's comments.
Elsewhere
"No news is bad for the pound sterling, no significant progress has been recorded in the Brexit negotiations and investors are impatient," said Kathy Lien, executive director of the strategy. exchange rate at BK Asset Management.
The Australian dollar
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