Trade optimism yields dollar's first positive week this year
* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
(Recasts, update prices, adds trade news)
By Kate Duguid
NEW YORK, Jan 18 (Reuters) - The dollar held firm against
its rivals on Friday, set for its first weekly gain since
mid-December on optimism about talks to end the trade war
between China and the United States.
Media reports on Thursday and Friday suggested both
countries were considering concessions ahead of a Washington
visit from Chinese Vice Premier Liu He on Jan. 30 and 31 for
talks aimed at resolving the trade standoff between the world's
two largest economies.
China has offered to go on a six-year buying spree to ramp
up imports from the United States in order to reconfigure the
relation between the two countries, Bloomberg reported on
Friday, citing people familiar with the matter.
U.S. Treasury Secretary Steven Mnuchin discussed lifting
some or all tariffs on Chinese goods and suggested offering a
tariff rollback during the trade discussions scheduled for Jan.
30, the Wall Street Journal reported on Thursday, citing people
familiar with the internal deliberations.
Although a Treasury spokesman denied Thursday's report, the
positive sentiment was enough to lift the dollar index
and the three major U.S. stock indexes Friday morning. Following
the publication of the Bloomberg story on Friday, the dollar
index added to its gains rising 0.3 percent, last at 96.352.
"Yesterday's WSJ headline concerning a possible rollback of
the Trump tariffs was a setback for (the U.S. dollar/renminbi
cross), and although it was subsequently denied, it had created
confusion in the foreign exchange space," said Stephen Gallo,
European head of foreign exchange strategy at BMO Capital
Markets in London.
Stronger-than-expected U.S. industrial production numbers
also helped lift the greenback. American manufacturing output
increased by the most in 10 months in December, pushed up by a
surge in the production of motor vehicles and a range of other
goods, the Federal Reserve said on Friday.
Going into 2019, weakness in the dollar was a consensus view
among currency market traders. The bet was that the U.S. central
bank would stop raising interest rates and the economy would
slow after a fiscal boost last year. While expectations of a
U.S. rate pause have manifested in money markets, bets on policy
tightening by other major central banks have also receded,
giving a boost to the dollar.
Against a basket of rivals, the dollar was set to rise 0.68
percent on the week, its first positive week since mid-December.
Against the euro, the dollar had strengthened 0.26 percent to
$1.137, its strongest since Jan. 4.
The pound slipped against the euro and against the
dollar, trimming overnight gains, as traders wagered on a
second referendum vote on Britain's EU membership.
(Reporting by Kate Duguid and Saikat Chatterjee; Editing by
Steve Orlofsky and Tom Brown)
First Published: 2019-01-18 03:34:58
Updated 2019-01-18 21:33:07
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