FOREX-Dollar rises on bleak outlook for U.S.-China trade talks

Reuters

Warning: This material has been prepared by a third party company, Reuters, which is independent of Davy. Davy has not reviewed the material and accepts no responsibility for errors or omissions, or for the information or opinions contained therein. It does not constitute investment advice.

    * Dollar stays firm as investors seek safe haven
    * Euro, sterling marginally weaker versus greenback
    * Onshore yuan falls vs dollar as China markets reopen
    * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

    By Tom Finn
    LONDON, Feb 11 (Reuters) - The dollar rose on Monday as
concerns grew that U.S.-China talks this week would not heal a
rift over trade between the world's largest economies.   
    The greenback is being lifted by its safe-haven appeal as
investors, worried about a sharp global economic slowdown, pile
into the world's most liquid currency.
    It is headed for an eighth consecutive day of gains.
    U.S. negotiators this week will press China to reform how it
treats U.S. companies' intellectual property.  urn:newsml:reuters.com:*:nL1N2030ZH 
    The high-level talks in Beijing are a leading focus for
investors, many of whom see little prospect for a trade deal and
instead expect an extension of the March 1 deadline for deciding
whether to increase tariffs. 
    Emerging market and China-sensitive currencies such as the
Australian dollar are most likely to be affected by developments
in the trade dispute this week.
    The strength in the dollar has emerged despite the Federal
Reserve striking a cautious tone at its policy meeting in
January. 
    "The U.S. currency is currently in demand as a safe haven.
This is reflected in the fact that the Swiss franc and the
Japanese yen – also typical safe haven currencies – have been
able to appreciate in conjunction with the dollar since the
start of the month," said Thu Lan Nguyen, an FX strategist at
Commerzbank in Germany. 
    The dollar index  .DXY , a gauge of its value versus six
major peers, was marginally higher at 96.74.
    The Swiss franc  CHF=EBS  was up 0.1 percent at 1.0006.
    Trump has vowed to increase U.S. tariffs on $200 billion
worth of Chinese imports to 25 percent from 10 percent if the
two sides cannot reach a deal.
    On Monday morning, when China markets reopened after a
one-week holiday break, the dollar was 0.5 percent higher versus
the yuan  CNY=  at 6.7753 while the offshore yuan  CNH=  was
relatively unchanged at 6.7808.
    Philip Wee, currency strategist at DBS, expects the yuan to
remain around 6.80 until there's more clarity on how the
U.S.-Sino trade dispute plays out.
    The euro  EUR=EBS  was a touch lower versus the greenback at
$1.1322 while the Aussie  AUD=D3  was 0.1 percent higher at
$0.7096, after a disastrous week in which it lost 2.2 percent.
    The euro came under pressure as core European government
debt yields touched their lowest in over two years. The single
currency has lost 2.5 percent so far this month.
    The European Commission on Thursday sharply cut its
forecasts for euro zone economic growth for this year and next.
 urn:newsml:reuters.com:*:nL5N2023IE 

 (Reporting by Tom Finn, Editing by William Maclean)
 ((mailto:tom.finn@tr.com; +44 2075427508 ; Reuters Messaging:
rm://tom.finn.reuters.com@reuters.net))

Warning: This content may be provided by regulated and unregulated entities and is not created, reviewed or endorsed by Davy. It is provided for general information purposes only and does not constitute a recommendation or solicitation to purchase or sell any security or make any other type of investment or investment decision. Importantly, it does not constitute investment advice, as it does not contemplate the personal circumstances of any particular person or group of persons. Neither Davy nor the providers of the Third Party Content will be liable for any investment decision made based on the reliance on or use of such data, or any liability that may arise due to delays or interruptions in the delivery of the Third Party Content for any reason.