FOREX-U.S.-China trade talk progress cools dollar rally

Reuters

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

 (Recasts; updates prices; adds trade talk news, analyst quotes;
changes dateline from LONDON to NEW YORK)
    By Kate Duguid
    NEW YORK, Feb 12 (Reuters) - The dollar was down modestly
mid-morning on Tuesday, cooling what was 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 as of
Monday, the most since February 2017, according to Refinitiv
data. The dollar index, which measures the currency against a
basket of six rivals, was 0.13 percent lower on Tuesday at
96.935  .DXY .
    Top U.S. officials arrived in the Chinese capital on Tuesday
ahead of high-level trade talks as the world's two largest
economies attempt to hammer out a deal ahead of a March 1
deadline to avoid another escalation of tariffs.  urn:newsml:reuters.com:*:nL3N2072YK
    Washington is expected to keep pressing long-standing
demands that Beijing make sweeping structural reforms to protect
American companies' intellectual property, end policies aimed at
forcing the transfer of technology to Chinese companies and curb
industrial subsidies.  urn:newsml:reuters.com:*:nL1N2030ZH
    "The multiday rally in the U.S. dollar abated amid tentative
cooling in global risks," said Joe Manimbo, senior market
analyst at Western Union Business Solutions. 
    The dollar ceded ground to the euro  EUR= , which was up
0.16 percent at $1.1294, and to the British pound  GBP= , up 0.3
percent, last at $1.2888. Against the Japanese yen, another
safe-haven currency, the dollar was little changed, slightly
weaker at 110.45 yen  JPY= . 
    The dollar earlier in the session had been trading higher as
U.S. lawmakers reached a tentative agreement on border-security
funding that might help avert another government shutdown, due
to start on Saturday.  urn:newsml:reuters.com:*:nL1N2060IA
    At the end of 2018, the dollar was the consensus short trade
among hedge funds, as traders bet the U.S. Federal Reserve would
pause in its rate increases and other major economies would grow
quickly. But while the Fed held interest rates steady last
month, the case for buying the euro and the pound has weakened
steadily. Economic data in Europe has disappointed and Brexit
concerns have dogged the British pound.
    "It is remarkable for the dollar to post this kind of rising
 streak after a dovish Fed last month, and it shows how cautious
investors are becoming over the outlook of the global economy,"
said Lee Hardman, a currency strategist at MUFG in London.
    On Jan. 30, the Fed said it would be "patient" before
raising rates again and signaled its balance sheet would remain
larger than previously expected.  urn:newsml:reuters.com:*:nW1N1YW001    

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 (Reporting by Kate Duguid and Saikat Chatterjee; Editing by
Steve Orlofsky)
 ((kate.duguid@thomsonreuters.com; +646-223-6118; Reuters
Messaging: kate.duguid@thomsonreuters.com@thomsonreuters.net))

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