Renewed hopes for trade talks between US and China cap dollar, support yuan

The dollar was firmly capped as the Chinese yuan rose on Thursday after Washington announced that it was looking for a new round of trade talks with Beijing, which reduced the demand for security for the US currency.

The euro and the pound sterling remained stable before the political decisions of the European Central Bank and the Bank of England planned later in the day.

The dollar index versus a basket of six major currencies changed little at 94.795 after falling about 0.5% the day before.

The greenback fell following the announcement that the Trump administration has invited Chinese officials to resume trade negotiations.

"The dollar has fallen on the latest trade-related news, but it is hard to imagine that the situation will improve dramatically at this meeting alone." Currencies will continue to react to every news about the Sino-US trade dispute. said Yukio Ishizuki. Senior Currency Strategist at Daiwa Securities.

The Chinese yuan rose 0.3% to 6.8450 for a dollar in land trading on Wednesday following new hopes of trade talks between the United States and China, returning from 6.8800 the previous day.

The Australian dollar, considered a liquid indicator of China-related transactions and a barometer of risk sentiment, rose 0.3% to $ 0.7194 after jumping 0.7% overnight.

Aussie 's saw an additional raise after the Australian employment figures higher than expected for Thursday.

The pound was stable at 1.3052 dollars after rising 0.1% the day before, after British party members, backed by British Prime Minister Theresa May, publicly promised to stay in power.

The Bank of England is expected to keep interest rates unchanged on Thursday, giving the economy time to digest the rise in borrowing costs in August, which was only the second of the last ten years since the financial crisis.

"The BoE and the ECB's political meetings are not supposed to be major events and they do not attract too much attention, but it remains to be seen whether the BoE talks about the recent Brexit negotiations," Ishizuki told reporters. Daiwa Securities.

The European Central Bank is almost certain to keep its policy unchanged on Thursday, only slightly changing its direction to stay on the path to the end of bond purchases this year and to raise interest rates next autumn.

The euro rose slightly by 0.1 percent to 1.1638 dollar after rising 0.2% overnight.