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The euro and the pound sterling rose slightly against the dollar on Friday after Britain and the European Union agreed on a draft text outlining their future relations before the summit. Sunday.
Traders have been cautiously optimistic about the draft declaration agreed by the UK and the European Commission, which explained how trade relations, security and other issues would work once the divorce concluded .
The euro and the pound sterling rose slightly on Friday, after rising from one day to the other by 0.2% and 0.8% respectively.
Traders are still waiting for more details on the Brexit deal, which faces a rough race once it reaches a deeply divided British parliament, with Eurosceptic factions and fiercely pro-EU supporters, as well as various shades of gray.
"A full reading of the text suggests that many important details need to be clarified.This document does not convince the market that it will pass through Parliament," said David de Garish, director of the economy and markets at NAB.
He said the market is still positioned with a short bias on the pound. A difference of 5 to 10% is therefore possible if a decisive agreement is concluded.
The dollar index, an indicator of its value against six major peers, has traded slightly down to 96.46. Much of the weakness is due to the strength of the euro and the pound sterling, which together make up 70% of the index.
The dollar has lost ground since two consecutive trading sessions and is down from the 16-month high of 97.69 reached earlier this month.
Dollar skeptics are worried about the pace of future interest rate increases by the US Federal Reserve.
The Fed is expected to make its fourth rate hike in 2018 in December, but markets are trying to gauge the extent to which a more restrictive policy could tighten next year without risking a slowdown in the domestic economy. which is up to now well held despite the costs of borrowing. resurrected.
"The Fed will likely raise interest rates in December, I do not see any change in the forward-looking forecast at next month's meeting as this would already imply a significant deterioration in economic activity," he said. From Garis.
The yen was at $ 112.96, little change from its previous close. The Japanese currency is traded in an extremely narrow range, with a soft bias over the last four trading days.
While the Fed is on the road to monetary tightening, the Bank of Japan remains committed to its extremely loose monetary policy because of weak growth and inflation. This interest rate differential between US and Japanese bonds makes the dollar a more attractive bet than the yen.
According to some analysts, another factor supporting the dollar / yen is that Japanese investors remain heavily invested in US and foreign assets.
The greenback rose 0.14% on the Canadian dollar, from $ 1.3206 to another, as crude prices plummeted fears of an oversupply of supply. Canada is one of the largest oil exporters in the world.
The Australian dollar, often considered an indicator of global risk appetite, has weakened by 0.08% to trade at $ 0.7251. Analysts expect the Australian dollar to remain moderate before US-Chinese leaders meet at the G20 summit in Argentina at the end of the month as markets are on the lookout for any sign if both parties agree to reduce their trade. war.
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