Dollar gains on trade deal hopes, strong U.S. economic data

  • Forex
  • Wednesday, 06 Nov 2019

The dollar index against major currencies was at 97.936, after rising 0.37% on Tuesday to 97.912.

TOKYO: The dollar held the upper hand against its rivals on Wednesday, particularly versus traditional safe-haven currencies, on rising hopes for a U.S.-China trade deal and a string of solid U.S. economic data.

The dollar index against major currencies was at 97.936, after rising 0.37% on Tuesday to 97.912.

Against the yen, the dollar traded at 109.16 yen , down 0.01% from late U.S. levels but near its October high of 109.285 and a three-month high of 109.25 hit on Oct. 30.

The Swiss franc changed hands at 0.9930 to the dollar following its 0.5% fall the previous day, while gold tumbled 1.73% on Tuesday and last stood at $1,484.1 per ounce, near the lower end of its trading range over the past month.

The euro stood at $1.1075 , having dropped 0.49% on Tuesday and was not far from a near three-week low of $1.10635 hit in U.S. trade. Hopes that the Trump administration could roll back some of tariffs it has imposed on goods from China as a part of a "phase one" U.S.-China trade deal boosted risk sentiment in financial markets.

A survey on the vast U.S. service sector published on Tuesday showed the business sentiment has improved in October from a three-year low in September.

The ISM non-manufacturing sector index rose to 54.7 from 52.6 in September, beating market expectations.

The rebound is a welcome sign for dollar bulls as a fall in the index would have suggested that malaise in trade war-hit manufacturers was infecting the service sector, too.

The data came after strong U.S. employment data on Friday.

"On top of Sino-U.S. trade issues, the market is reacting to signs of U.S. economic strength at the moment," said Kyosuke Suzuki, director of foreign exchange at Societe Generale.

The positive mood spilled over to the risk-sensitive Australian dollar, which changed hands at $0.6894 . It was little changed on the day but has maintained gains of 3.4% since hitting a 10-1/2-year low on Oct. 2.

The offshore yuan traded at 7.0005 yuan per dollar , after having risen to three-month high of 6.9867 to the dollar on Tuesday on rising trade deal hopes.

The currency has gained 2.8 percent from its record low in the offshore trade marked in early September. - Reuters

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