The dollar on Monday was broadly higher against safe-haven currencies such as the yen and Swiss franc, bolstered by higher risk appetite due to U.S.-China trade hopes and Friday’s generally upbeat U.S. non-farm payrolls report for October.
“Market trends are being influenced by a better risk mood overall,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto. He said trade hopes rose on U.S. Commerce Secretary’s Wilbur Ross’ optimism that a preliminary deal would be signed this month.
Licenses for U.S. companies to sell components to China’s Huawei Technologies Co “will be forthcoming very shortly,” Ross said in an interview with Bloomberg published on Sunday. He noted the U.S. government had received 206 requests for licenses.
The euro slipped as investors awaited Christine Lagarde’s first speech as European Central Bank president. But the single currency remained near its highest levels in weeks after Ross said in the interview that Washington may not slap tariffs on imported vehicles after “good conversations” with automakers in the European Union, Japan and Korea. Tariffs have already been delayed once by six months, and trade experts say that could happen again.
Lagarde delivers her first address as ECB chief on Monday, and markets assume she will stick with the easy policy of her predecessor, Mario Draghi. That view was boosted by data showing Germany’s manufacturing sector remained stuck in recession and euro zone factory activity contracted sharply in October. In other currencies, the dollar rose 0.2% to 108.44 yen.
Against the Swiss franc, another safe haven, the dollar was up 0.2% at 0.9873 franc. World stock markets rallied, denting demand for safe-haven investments, after the world’s two largest economies both said on Friday they had made progress in trade talks.
U.S. officials said a Phase-1 deal could be signed this month. The Chinese yuan rose to a 12-week high of 7.0225 against the greenback in the offshore market as risk sentiment continued to improve. An index that tracks the dollar against six major currencies was last up 0.1% at 97.323, breaching the 200-day moving average of 97.303.
Sterling was flat to slightly down at $1.2925, after last month’s rally from $1.2200, as investors wagered there was less risk of a hard Brexit now that an election campaign was underway.