US Markets

Dollar dips on trade optimism, before Fed meeting

Credit: REUTERS/THOMAS WHITE

The U.S. dollar slipped on Monday as optimism that the U.S. and China will reach a trade deal reduced demand for safe haven currencies, and as investors waited on the Federal Reserve’s meeting this week.

By Karen Brettell

NEW YORK, Oct 28 (Reuters) - The U.S. dollar slipped on Monday as optimism that the U.S. and China will reach a trade deal reduced demand for safe haven currencies, and as investors waited on the Federal Reserve’s meeting this week.

U.S. President Donald Trump said on Monday he expected to sign a significant part of the trade deal with China ahead of schedule but did not elaborate on the timing.

The comments come after the U.S. Trade Representative's office and China's Commerce Ministry said on Friday that U.S. and Chinese officials are "close to finalizing" some parts of a trade agreement, with talks to continue.

The trade war between the U.S. and China has been blamed for adding to global economic weakness, which in turn has prompted central banks globally to cut rates.

"Positive trade headlines continue to support our view that trade tensions are easing," said Win Thin, global head of FX strategy at Brown Brothers Harriman.

The dollar index against a basket of six major currencies .DXY fell 0.07% to 97.765. The greenback gained 0.19% against the Swiss franc CHF= to 0.9962. The Australian dollar AUD=, which is highly sensitive to the Chinese economy, rose 0.07% to $0.6827 U.S. dollars.

Hopes that Britain will reach a deal to leave the European Union, and avoid a disorderly exit, also boosted risk sentiment on Monday.

The European Union on Monday agreed to a 3-month flexible delay to Britain's departure from the bloc as Prime Minister Boris Johnson pushes for an election after opponents forced him to request an extension he had vowed never to ask for.

The next major U.S. focus is this week’s Federal Reserve meeting. The U.S. central bank is expected to cut rates when it concludes its two-day meeting on Wednesday, though investors will be watching for any indication that further cuts are likely.

Fed policymakers are deeply divided on whether the U.S. central bank should continue cutting rates.

"There's still an awful lot of discrepancy and uncertainty in the markets as to what the Fed will do next year,” said Jane Foley, senior FX strategist at Rabobank. "The market will be looking for clues as to which way that might go."

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Currency bid prices at 9:47AM (1347 GMT)

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=

$1.1094

$1.1078

+0.14%

-3.27%

+1.1107

+1.1077

Dollar/Yen

JPY=

108.9200

108.6400

+0.26%

-1.22%

+108.9300

+108.6700

Euro/Yen

EURJPY=

120.85

120.38

+0.39%

-4.25%

+120.8700

+120.4200

Dollar/Swiss

CHF=

0.9962

0.9943

+0.19%

+1.51%

+0.9970

+0.9936

Sterling/Dollar

GBP=

1.2856

1.2821

+0.27%

+0.78%

+1.2860

+1.2812

Dollar/Canadian

CAD=

1.3052

1.3058

-0.05%

-4.29%

+1.3078

+1.3048

Australian/Dollar

AUD=

0.6827

0.6822

+0.07%

-3.15%

+0.6833

+0.6812

Euro/Swiss

EURCHF=

1.1057

1.1017

+0.36%

-1.75%

+1.1058

+1.1015

Euro/Sterling

EURGBP=

0.8628

0.8634

-0.07%

-3.96%

+0.8652

+0.8629

NZ Dollar/Dollar

NZD=

0.6339

0.6347

-0.13%

-5.63%

+0.6359

+0.6337

Dollar/Norway

NOK=

9.1987

9.1950

+0.04%

+6.48%

+9.2244

+9.1800

Euro/Norway

EURNOK=

10.2068

10.1883

+0.18%

+3.04%

+10.2348

+10.1810

Dollar/Sweden

SEK=

9.6842

9.6836

+0.15%

+8.04%

+9.6989

+9.6667

Euro/Sweden

EURSEK=

10.7456

10.7297

+0.15%

+4.69%

+10.7540

+10.7260

(Additional reporting by Elizabeth Howcroft in London Editing by Chizu Nomiyama)

((Karen.Brettell@thomsonreuters.com; +1 646 223 6274; Reuters Messaging: karen.brettell.reuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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