Trade talk hopes poise dollar for first positive week this year

American dollar notes are displayed in this photo illustration in Johannesburg August 13, 2014. — Reuters pic
American dollar notes are displayed in this photo illustration in Johannesburg August 13, 2014. — Reuters pic

NEW YORK, Jan 19 — The dollar held firm against its rivals yesterday and was poised for its first weekly gain in five weeks, boosted by optimism about trade talks between and the United States.

US Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs on goods and suggested offering a tariff rollback during trade discussions scheduled for 30, the Journal reported on Thursday, citing people familiar with the internal deliberations.

Although a Treasury spokesman denied the report, the was enough to lift the dollar index and the three major indexes yesterday morning.

“Yesterday’s WSJ headline concerning a possible rollback of the Trump tariffs was a setback for (the /renminbi cross), and although it was subsequently denied, it had created confusion in the foreign exchange space,” said Stephen Gallo, European head of foreign exchange strategy at BMO Capital Markets in London.

Chinese Vice Premier Liu He will visit the United States on January 30 and 31 for talks aimed at resolving the trade standoff between the world’s two largest .

Stronger-than-expected US industrial production numbers also helped lift the greenback. American manufacturing output increased by the most in 10 months in December, pushed up by a surge in the production of motor vehicles and a range of other goods, the Federal Reserve said yesterday.

Going into 2019, weakness in the dollar was a consensus view among currency market traders. The bet was that the US would stop raising interest rates and the economy would slow after a fiscal boost last year. While expectations of a US rate pause have manifested in money markets, bets on policy tightening by other major central banks have also receded, giving a boost to the dollar.

Against a basket of rivals, the dollar was set to rise 0.6 per cent on the week, its first positive week since mid-December. Against the euro, the dollar had strengthened 0.25 per cent to US$1.137 (RM4.675), its strongest since January 4.

The pound slipped against the euro, partially trimming overnight gains, as traders wagered on a second referendum vote on Britain’s EU membership. — Reuters

Source: The Malay Mail Online

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