U.S. Dollar Climbs On Trade Optimism, China Stimulus
January 02 2020 - 2:57AM
RTTF2
The U.S. dollar strengthened against its major counterparts in
the European session on Thursday, as easing fears about US-Sino
trade relations and China stimulus measures boosted investor
sentiment.
In a major milestone in a bilateral trade war, U.S. President
Donald Trump announced that the phase one trade deal with China
will be signed during a White House ceremony on January 15th, and
that he would later travel to Beijing to begin negotiations on the
next phase.
News of monetary policy easing by China also helped underpin
investor sentiment. The People's Bank of China said it would cut
banks' reserve requirement ratio by 50 basis points on Jan. 6,
freeing up more than USD 100 billion for loans to small
businesses.
On the economic front, the U.S. weekly jobless claims for the
week ended December 28 and Markit's final manufacturing PMI for
December will be highlighted in the American session.
The greenback strengthened to a 3-day high of 0.9711 against the
franc and a 2-day high of 1.3188 against the pound, from early lows
of 0.9668 and 1.3270, respectively. The next possible resistance
for the greenback is seen around 1.00 against the franc and 1.30
against the pound.
After falling to 1.1260 against the euro in the previous
session, the greenback reversed direction and appreciated to
1.1183. On the upside, 1.10 is possibly seen as its next resistance
level.
Final data from IHS Markit showed that the euro area
manufacturing sector continued to contract in December with
weakness spread across most of the member countries.
The manufacturing Purchasing Managers' Index fell to 46.3 in
December from 46.9 in November. However, the score was above the
flash reading of 45.9.
Reversing from its early lows of 0.6740 against the kiwi and
0.7021 against the aussie, the greenback firmed to a 6-day high of
0.6684 and a 3-day high of 0.6983, respectively. The currency is
likely to locate resistance around 0.65 against the kiwi and 0.69
against the aussie.
The greenback edged up to 1.3010 against the loonie and 108.87
against the yen, off its early lows of 1.2969 and 108.60,
respectively. If the greenback rallies further, it may find
resistance around 1.32 against the loonie and 111.00 against the
yen.
Looking ahead, the U.S. weekly jobless claims for the week ended
December 28 and Markit's final manufacturing PMI for December are
set for release in the New York session.
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