FOREX-Risk appetite returns, dollar rally ends as trade talks progress

Reuters

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    * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

 (Recasts, updates prices, adds analyst quotes)
    By Kate Duguid
    NEW YORK, Feb 12 (Reuters) - The dollar fell on Tuesday,
ending its longest winning streak in two years, as investors put
money in riskier assets on rising hopes of a breakthrough in
U.S-China trade talks.
    The dollar had gained for eight consecutive sessions at the
end of Monday, the most since February 2017, according to
Refinitiv data. But the dollar index, which measures the
currency against a basket of six rivals, was 0.38 percent lower
on Tuesday at 96.694  .DXY .
    U.S. President Donald Trump said on Tuesday that he could
let the March 1 deadline for a trade agreement with China "slide
for a little while," but that he would prefer not to and expects
to meet with Chinese President Xi Jinping to close the deal at
some point.  urn:newsml:reuters.com:*:nL3N2072YK
    Trump's top trade negotiator and Treasury secretary arrived
in the Chinese capital on Tuesday for high-level talks later in
the week as the world's two largest economies attempt to hammer
out a deal to protect American trade secrets and avoid another
escalation of U.S. tariffs on Chinese goods.
    Some analysts suggested that softer data out of China,
including expectations of slowing growth, could help facilitate
a deal. 
    "The economy of China is not booming, so it makes sense that
they are willing to sit down with the United States. There is
leverage on the side of the United States," said Juan Perez,
senior foreign exchange trader and strategist at Tempus, Inc.
    The dollar ceded ground to the euro  EUR= , which was up
0.51 percent at $1.1333, and to the British pound  GBP= , up
0.39 percent, last at $1.2898. 
    Other safe-haven assets were also hit. Against the Japanese
yen, the dollar was slightly stronger at 110.46 yen  JPY= . The
Swiss franc weakened against the dollar to $1.0057  CHF= . 
    The dollar may have also been boosted as U.S. lawmakers
reached a tentative agreement on border-security funding that
might help avert another government shutdown, otherwise due to
start on Saturday. 
    Trump expressed displeasure on Tuesday with a deal by
congressional negotiators on border security spending that
offered no funds for his promised U.S.-Mexican border wall, but
did not reject it outright and indicated he did not expect a
shutdown.  urn:newsml:reuters.com:*:nL1N2070KZ
    "With the government shutdown, people without paychecks and
unstable trade dynamics all going on, it made sense for the
dollar to rally," said Perez. 
    "Today is one of those days where we're getting signals that
a lot of these issues can be resolved." 

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Citi Economic Surprise Index    https://tmsnrt.rs/2TQOckB
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 (Reporting by Kate Duguid and Saikat Chatterjee; Editing by
Steve Orlofsky and Dan Grebler)
 ((kate.duguid@thomsonreuters.com; +646-223-6118; Reuters
Messaging: kate.duguid@thomsonreuters.com@thomsonreuters.net))

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