Dollar catches a bid on U.S./China trade talk optimism and rising U.S. yields

Market Review - 26/10/2019 01:58

Dollar catches a bid on U.S./China trade talk optimism and rising U.S. yields

The greenback remained on the front foot in New York trading on Frioday and ended higher against its G4 peers due to renewed U.S.-China trade optimism after United States Trade Representative said both parties are close to finalizing some sections of the trade agreement. Sterling remained under pressire on Brexit election uncertainty as well as concerns if an extension would be granted by the European Union.  
  
Reuters reported the United States and China are closing to finalizing some sections of a trade agreement after a phone call between top negotiators, CNBC reported on Friday, citing a statement from the Office of the U.S. Trade Representative.   
  
"They made headway on specific issues and the two sides are close to finalizing some sections of the agreement," the statement cited by CNBC said. "Discussions will go on continuously at the deputy level, and the principals will have another call in the near future."   
  
Versus the Japanese yen, dollar swung broadly sideways in lackluster Friday's session. Price edged up to 108.70 at Asian open and then retreated to 108.56 ahead of New York open on cross-buying in jpy before rising to intra-day high at 108.77 on renewed U.S.-China trade optimism and rising U.S. yields. Price last traded at 108.64 near the close.  
  
Although the single currency moved narrowly in Asia and then recovered to 1.1122 in European morning, price met renewed selling and later dropped in tandem with sterling to a 1-week low of 1.1074 near New York midday on broad-based selling in euro, especially versus yen and sterling.  
  
On the data front, Reuters reported German business morale held steady in October and Europe's largest economy is stabilising after contracting earlier in the year, a survey showed on Friday.   
  
The Ifo institute said its business climate index was unchanged from the prior month in October at 94.6. The October reading compared with a consensus forecast for 94.5.   
  
"The German economy is stabilising," Ifo President Clemens Fuest said in a statement.   
  
Although the British pound moved sideways in Asia and recovered to 1.2863 in European morning, cable met renewed selling and fell to 1.2824, then to   
session lows at 1.2805 in New York morning as European Union could not set a date for Brexit extension as well as continued UK Brexit election concern before staging a strong rebound to 1.2843 on short-covering ahead of weekend.  
  
Reuters reported European Union ambassadors on Friday agreed in principle to delay Brexit, but set no new date, European Commission spokeswoman Mina Andreeva said.   
  
An EU official added after the meeting of the 27 national envoys from countries that will stay in the EU after Britian leaves to discuss London's request to postpone Brexit beyond Oct 31 that there was full agreement on the need for an extension.   
  
"Work will continue over the weekend. (27 EU ambassadors) are expected to meet early next week, on Monday or Tuesday, to finalise an agreement," the person added, stressing that the bloc would not call a special summit of leaders to do that.   
  
A senior EU diplomat, who took part in the meeting in Brussels earlier on Friday, added: "We continue with discussion."   
  
Data to be released next week :  
  
New Zealand market holiday, UK CBI distributive trades and U.S. trade balance, wholesale inventories, Chicago Fed national activity, Dallas Fed manufacturing business index on Monday.  
  
Japan core CPI, CPI, Germany import pries, France consumer confidence, Italy producer price and U.S. redbook, consumer confidence, pending home sales on Tuesday.  
  
Japan retail sales, Australia CPI, France GDP, consumer spending, UK nationwide house price, Italy consumer confidence, MFG business confidence, Swiss KOF indicator, investor sentiment, Germany unemployment change, unemployment rate, CPI, HICP, EU business climate, economic sentiment, services sentiment, industrial sentiment, consumer confidence, U.S. MBA mortgage application, GDP, ADP national employment, GDP deflator, core POE prices, POE prices, FOMC rate decision and Canada BoC rate decision on Wednesday.  
  
New Zealand building permits, NBNZ business outlook, NBNZ own activity, Japan industrial output, consumer confidence, housing starts, Australia export prices, import prices, China NBS non-manufacturing PMI, NBS manufacturing PMI, UK GfK consumer confidence, Germany retail sales, France CPI (non-EU), CPI, Italy GDP, unemployment rate, consumer price, CPI (EU norm), EU HICP, core HICP, GDP, unemployment, U.S. employment costs, personal income, personal spending, core PCE, PCE price index, employment wage, Chicago PMI and Canada GDP, producer prices, average weekly earning on Thursday.  
  
Australia AIG manufacturing index, PPI, Japan unemployment rate, BoJ rate decision, construction orders, consumer confidence, China Caixin manufacturing, Swiss CPI, manufacturing PMI, retail sales, retail sales, UK Markit manufacturing PMI, U.S. manufacturing PMI, non-farm payrolls, unemployment rate, average earning, Markit manufacturing PMI, construction spending, ISM manufacturing and Canada Markit manufacturing PMI on Friday.