Trade war worries dollar gains

LONDON (Reuters) – The dollar consolidated its gains on Wednesday as markets remained cautious about US-Canada trade talks, as lingering weakness in the Chinese currency weighed on sentiment.

With a market appetite for limited risk taking – an Asian stock index down for the 10th consecutive day and a decline in emerging currencies led by the Indian rupee – traders have sold currencies perceived as vulnerable to escalating conflict commercial.

The Australian dollar led the decline in major currencies, falling 0.3% to $ 0.7102 and close to the $ 0.7085 dip recorded in February 2016.

The dollar has risen nearly 1% over the last two weeks, bringing its gains in the last six months to more than six percent.

"Emerging market liquidity seems to be widening and monetary and financial conditions have tightened, which does not augur well for growth prospects," said Morgan Stanley's strategists.

Faced with a basket of rivals, the dollar was stable at 95.20, close to the three-week high of 95.74 reached last week.

Two Canadian sources said the next day, Ottawa was ready to offer the United States limited access to the Canadian dairy market as part of negotiations to redo the North American Free Trade Agreement.

The Canadian dollar was little changed at US $ 1.3073 per US dollar after recovering nearly three quarters of percent late in the US session.

Nevertheless, the concern over the trade dispute between China and the United States, the world's two largest economies, has kept most investors out.

China's offshore yuan fell 0.1% to 6.8857 dollars after dropping to 6.8888, its lowest level in more than two weeks.

An index for emerging market currencies was close to a 16-month low reached the day before.

"You can not deny that emerging markets have fallen and this has weighed on sentiment, and this has probably pushed a lot of money into the US and the dollar," said Bart Wakabayashi, director of the Tokyo branch. from State Street Bank.