Dollar Trading Mixed Due To Trade Uncertainty
December 04 2018 - 9:14AM
RTTF2
The dollar has recovered from its early losses against its major
European rivals Tuesday afternoon, but remains down against the
Japanese Yen. The initial excitement over the trade war truce
reached by President Donald Trump and Chinese President Xi Jinping
at the G20 summit over the weekend has cooled.
Uncertainty about whether the 90-day truce will give the U.S.
and China enough time to reach a long-term trade agreement has
caused traders to adopt a more cautious demeanor.
News that U.S. Trade Representative Robert Lighthizer, one of
Trump's more hawkish advisors on trade with China, has been tapped
to lead the negotiations has added to the skepticism.
The dollar dropped to over a 1-week low of $1.1418 against the
Euro Tuesday morning, but has since rebounded to around
$1.1340.
Eurozone producer price inflation accelerated further in
October, defying expectations, figures from Eurostat showed
Tuesday. Producer prices rose 4.9 percent year-on-year after a
revised 4.6 percent in September. Economists had expected the rate
to remain unchanged at September's original figure of 4.5
percent.
A leading European legal official said that the U.K. can still
halt Brexit by revoking Article 50 without the consent of other EU
member states.
The advocate general said Article 50 of the Libson Treaty allows
the "unilateral revocation of the notification of the intention to
withdraw from the European Union, until such time as the Withdrawal
Agreement is formally concluded."
The Bank of England governor Mark Carney suggested that the
probability of the occurrence of a disorderly Brexit is very
low.
"Tail risk is tail risk, it's low probability. And MPs on the
committee probably have a better idea about how Brexit will play
out," Carney told Treasury Committee.
The buck fell to an early low of $1.2839 against the pound
sterling Tuesday, but has since bounced back to around $1.2725.
British construction sector expanded at the fastest pace in four
months in November, thanks to an increase in new work and
consequent gains in job creation, though Brexit concerns damped
expectations for the months ahead.
The CIPS construction Purchasing Managers' Index climbed to 53.4
from 53.2 in October, survey data from IHS Markit showed on
Tuesday. Economists had forecast a score of 52.5.
The greenback has dropped to around Y112.735 against the
Japanese Yen this afternoon, from an early high of Y113.637.
The monetary base in Japan was up 6.1 percent on year in
November, the Bank of Japan said on Tuesday, coming in at 501.330
trillion yen. That follows two straight months of 5.9 percent
gains.
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