US Markets

Yen gains as report casts doubts on trade deal

Credit: REUTERS/Thomas White

The safe haven Japanese yen gained on Monday after a media report dashed fresh hopes that the United States and China are close to reaching a trade deal.

By Karen Brettell

NEW YORK, Nov 18 (Reuters) - The safe haven Japanese yen gained on Monday after a media report dashed fresh hopes that the United States and China are close to reaching a trade deal.

CNBC reported that China is pessimistic about reaching a trade deal due to U.S. President Donald Trump’s reluctance to roll back tariffs.

It came after Chinese state media Xinhua said on Sunday that China and the United States had "constructive talks" on trade in a high-level phone call on Saturday.

“I think the market is overreacting to this,” said Mazen Issa, senior FX strategist at TD Securities in New York. “There was nothing substantive that came out that suggested the deal is off or on, it’s just the ebb and flow” of the news each day.

Investors are looking for signs that tariffs imposed on each country’s goods will be rolled back, as they are viewed as harming global economic growth.

Another round of U.S. tariffs on Chinese goods is scheduled to take effect on Dec. 15.

The yen JPY= gained to 108.64, from 109.02 before the CNBC report was released.

The euro EUR= reached at 10-day high against the greenback at 1.1063.

The single currency has rebounded from a more than two-year low of 1.0877 on Oct. 1 on optimism a trade deal will be signed.

"Market participants remain optimistic that a partial U.S.-China trade deal will be signed soon and have welcomed tentative signs of economic improvement outside of the U.S., especially in the euro zone, both of which are eroding the relative appeal of the U.S. dollar," Lee Hardman, currency analyst at MUFG, said.

Still analysts say that the European and global economies need to show more strength to sustain a euro rally.

“One of the things the euro is, is a pro-cyclical or growth currency and so when global growth performs well you tend to see the euro perform well, but we’re not there yet,” said TD's Issa.

Sterling, meanwhile, was boosted by expectations that the Conservative (Tory) Party could win a majority in the Dec. 12 election.

It was also supported by British Prime Minister Boris Johnson saying that all Tory candidates in the election have pledged to back his Brexit deal, which could open the door to getting the agreement through parliament.

========================================================

Currency bid prices at 9:42AM (1442 GMT)

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=

$1.1063

$1.1050

+0.12%

-3.54%

+1.1068

+1.1050

Dollar/Yen

JPY=

108.6400

108.7300

-0.08%

-1.47%

+109.0600

+108.6300

Euro/Yen

EURJPY=

120.19

120.20

-0.01%

-4.78%

+120.6800

+120.1000

Dollar/Swiss

CHF=

0.9880

0.9897

-0.17%

+0.67%

+0.9914

+0.9882

Sterling/Dollar

GBP=

1.2963

1.2899

+0.50%

+1.61%

+1.2984

+1.2901

Dollar/Canadian

CAD=

1.3223

1.3221

+0.02%

-3.04%

+1.3235

+1.3210

Australian/Dollar

AUD=

0.6805

0.6819

-0.21%

-3.46%

+0.6822

+0.6799

Euro/Swiss

EURCHF=

1.0931

1.0937

-0.05%

-2.87%

+1.0962

+1.0931

Euro/Sterling

EURGBP=

0.8534

0.8565

-0.36%

-5.01%

+0.8566

+0.8523

NZ Dollar/Dollar

NZD=

0.6396

0.6399

-0.05%

-4.78%

+0.6412

+0.6391

Dollar/Norway

NOK=

9.1201

9.0898

+0.33%

+5.57%

+9.1330

+9.0642

Euro/Norway

EURNOK=

10.0914

10.0410

+0.50%

+1.87%

+10.0988

+10.0272

Dollar/Sweden

SEK=

9.6394

9.6390

+0.09%

+7.54%

+9.6490

+9.6195

Euro/Sweden

EURSEK=

10.6654

10.6557

+0.09%

+3.91%

+10.6697

+10.6430

(Editing by Karen Brettell; Additional reporting by Olga Cotaga in London; Editing by Steve Orlofsky)

((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.

Latest US Markets Videos

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More