US Markets

Yen, Swiss franc advance after new U.S.-China trade wrinkle

Credit: REUTERS/THOMAS WHITE

The safe-haven yen and Swiss franc rallied against the dollar on Tuesday as risk appetite eased after U.S. President Donald Trump said a trade deal with China might have to wait until after the 2020 U.S. presidential election.

By Gertrude Chavez-Dreyfuss

NEW YORK, Dec 3 (Reuters) - The safe-haven yen and Swiss franc rallied against the dollar on Tuesday as risk appetite eased after U.S. President Donald Trump said a trade deal with China might have to wait until after the 2020 U.S. presidential election.

China's offshore yuan fell to its weakest versus the dollar since October after Trump's comments.

The surprise statement hit the U.S. dollar broadly as investors dumped the currency, which has tended to rise when optimism over a trade deal has grown. Market participants have long been waiting for a final trade deal, especially as both countries appeared to be nearing a preliminary one.

Trump said he had no deadline on agreement with Beijing, sparking a selloff in equities.

The news came after Trump on Monday said his administration would impose tariffs on metal imports from Argentina and Brazil on Monday and likely would impose more on a range of French goods.

"Markets have been jostled around with Trump's newfound affinity for trade tariffs," said Mazen Issa, senior FX strategist at TD Securities in New York.

"In the last 24 hours, he has ignited tensions with Brazil, Argentina, France and China. Nonetheless, risk sentiment has absorbed the latest developments," he added.

Analysts pointed out though that Trump's missives on trade came at a time when impeachment developments will come into more focus this week. Trump has been accused of improperly pressuring Ukraine to probe former vice president Joe Biden, a political rival in the 2020 presidential election.

The Democratic-controlled House Intelligence Committee is scheduled to vote on its findings later on Tuesday. The matter will then go to the House Judiciary Committee, which will launch its proceedings on Wednesday.

"It is perhaps not a coincidence that Trump may be trying to disrupt the news cycle," TD's Issa said.

In mid-morning trading, the dollar fell 0.3% against the yen to 108.60 yen JPY=. Against the Swiss franc, the dollar also slid, down 0.4% at 0.98752 franc CHF=.

The dollar index slipped 0.1% overall to 97.743 .DXY

China's offshore yuan was a big casualty as well, with the with the dollar rising 0.4 percent to 7.0695 yuan CNH=EBS, its highest since late October.

Moves in currency markets though were broadly contained, with volatility remaining low and investors not appearing to take much fright.

Of concern for the dollar's fortunes, however, was Monday's weak U.S. manufacturing report.

The U.S. Institute for Supply Management said its index of national factory activity fell to a below-forecast 48.1 in November. Separate data showed construction spending declined in October.

The readings surprised economists who had recently raised U.S. growth forecasts for the fourth quarter.

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

Currency bid prices at 9:55 AM (1455 GMT)

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=

$1.1082

$1.1077

+0.05%

-3.37%

+1.1087

+1.1066

Dollar/Yen

JPY=

108.6100

108.9800

-0.34%

-1.48%

+109.2000

+108.5600

Euro/Yen

EURJPY=

120.39

120.72

-0.27%

-4.62%

+120.9600

+120.3200

Dollar/Swiss

CHF=

0.9867

0.9911

-0.44%

+0.54%

+0.9926

+0.9867

Sterling/Dollar

GBP=

1.2998

1.2936

+0.48%

+1.89%

+1.3009

+1.2931

Dollar/Canadian

CAD=

1.3310

1.3308

+0.02%

-2.40%

+1.3321

+1.3283

Australian/Dollar

AUD=

0.6837

0.6817

+0.29%

-3.01%

+0.6862

+0.6815

Euro/Swiss

EURCHF=

1.0937

1.0982

-0.41%

-2.82%

+1.0993

+1.0936

Euro/Sterling

EURGBP=

0.8527

0.8559

-0.37%

-5.09%

+0.8565

+0.8513

NZ Dollar/Dollar

NZD=

0.6515

0.6501

+0.22%

-3.01%

+0.6533

+0.6494

Dollar/Norway

NOK=

9.1872

9.1638

+0.26%

+6.35%

+9.1915

+9.1361

Euro/Norway

EURNOK=

10.1835

10.1529

+0.30%

+2.80%

+10.1863

+10.1238

Dollar/Sweden

SEK=

9.5363

9.5405

+0.02%

+6.39%

+9.5517

+9.4938

Euro/Sweden

EURSEK=

10.5707

10.5681

+0.02%

+2.99%

+10.5760

+10.5220

U.S. dollar vs offshore Chinese yuanhttps://tmsnrt.rs/2P9oKW1

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Tommy Wilkes in London; Editing by Steve Orlofsky)

((gertrude.chavez@thomsonreuters.com; 646-223-6322; Reuters Messaging: gertrude.chavez.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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