Dollar struggles before Fed minutes; yuan hits 3-week high
* Euro/dollar trades quietly before Fed policy minutes
* Yuan further buoyed by trade talk hopes
* Yen loses more ground to dollar after BoJ comments
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds details, updates with latest prices)
By Tommy Wilkes
LONDON, Feb 20 (Reuters) - China's yuan rose on Wednesday
after the United States pressed Beijing to prevent a sharp
weakening of its currency as part of any trade deal, while the
dollar paused as traders positioned ahead of the release of
Federal Reserve policy minutes.
The yuan has been a strong performer in 2019, helped by the
recovery in emerging market assets broadly and optimism that
Washington and Beijing are close to agreeing a deal to end their
In offshore markets, the yuan rose 0.4 percent to as much as
6.7168, its strongest since Feb. 1.
The dollar, measured against a basket of currencies, held
steady at 96.494, away from two-month highs hit last
Demand for the liquid greenback has ebbed on optimism that a
fresh round of talks between China and the United States would
help resolve their trade conflict.
The euro nudged higher to $1.1350 but was stuck
within recent ranges - the common currency has struggled this
month as worries about the state of the euro zone economy grow.
ABN AMRO analyst Georgette Boele said the bank had
downgraded its euro forecasts for 2019 because of economic
"However, we also expect limited downside in the euro,
because weaker-than-expected euro zone data have had only a
limited negative impact on the euro, suggesting that most of the
weakness is reflected in the price," she said.
The benchmark 10-year U.S. Treasury yield fell
sharply to an 11-day low on Tuesday ahead of the Fed meeting
minutes, which are due later on Wednesday, further dampening
demand for the dollar.
The minutes from the January Fed meeting will be closely
watched following a dovish statement at that review.
Analysts say weaker than expected U.S. retail sales and
industrial production numbers published this month have,
according to MUFG, "challenged the view that the U.S. economy
will continue to hold up relatively well while overseas
economies are displaying more acute weakness."
The yen fell another 0.3 percent against the dollar to
110.95 after disappointing trade numbers showed that
Japanese exports fell the most in two years in January.
The yen had taken a hit on Tuesday after Bank of Japan
Governor Haruhiko Kuroda said the central bank was ready to ramp
up stimulus if sharp yen rises hurt the economy.
Sterling slipped back 0.3 percent but held above $1.30
following Tuesday's surge on hopes Prime Minister Theresa
May can make progress in Brussels on Wednesday as she tries to
tweak her Brexit withdrawal agreement.
(Editing by Gareth Jones)
First Published: 2019-02-20 02:18:48
Updated 2019-02-20 12:03:41
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