Dollar slips as investors wait for fresh news on trade talks
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 6 (Reuters) - The dollar drifted lower Wednesday, with the market in consolidation mode, as investors sought more clarity about ongoing U.S.-China trade negotiations.
The yen, a safe haven, was higher on the day against the dollar as some uncertainty crept back into the market.
Still, as the United States and China work to narrow their differences enough to sign a "phase one" trade deal as early as this month, hopes of a breakthrough have boosted sentiment across world markets.
"What you saw over the last two days is a bit of confusion on the China phase one deal...and that started affecting risk appetite," said Juan Perez, senior currency trader, at Tempus Inc in Washington.
After sizable moves on Tuesday, which included a strengthening in China's offshore yuan to three-month highs against the dollar, currency markets moved into wait-and-see mode.
That sentiment was echoed in global stock markets, which steadied after a three-day rally.
"Tangible signs of progress — beyond the incessant promise from administration officials that headway is being made — on the partial trade deal remains elusive," said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.
"This may mean that pro-risk sentiment is built on rather fragile foundations," he added.
In mid-morning trading, the dollar index, which measures the greenback's value against other major currencies .DXY, was 0.1% lower at 97.875, after hitting a three-week high on Tuesday.
The dollar was 0.2% softer against the yen at 109.00 yen, although still within sight of a three-months high hit last week at 109.285.
Europe's common currency, meanwhile, was a touch firmer at $1.1080 <EUR=>. The euro benefited from data released on Wednesday showing German industrial orders rose more than expected in September, offering a glimmer of hope for an export-powered economy hit hard by global trade tensions.
The Swiss franc CHF= changed hands at 0.9929 to the dollar, little changed on the day.
Analysts said better-than-expected U.S. economic data in the past week had eased expectations for further easing from the U.S. Federal Reserve and that this boded well for the dollar outlook.
A survey of the vast U.S. service sector published on Tuesday showed that business sentiment had improved in October from a three-year low in September.
The rebound is a welcome sign for dollar bulls as a fall in the service sector index would have suggested that the malaise among manufacturers hit by the trade war was also infecting the service sector. That followed a strong U.S. employment report on Friday.
China's offshore yuan steadied around 7.00 per dollar CNH=EBS in Europe after having risen to a three-month high of 6.9867 to the dollar on Tuesday on hopes for a trade truce.
The currency has gained almost 3% from its record low in the offshore trade marked in early September.
Currency bid prices at 10:11AM (1511 GMT)
U.S. Close Previous Session
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G7 implied volhttps://tmsnrt.rs/2NmpKXh
World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Dhara Ranasinghe in London Editing by Marguerita Choy)
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