Dollar shaky as China trade worries weigh

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Europe

The US dollar slipped against the Japanese yen on Friday, as China unveiled a list of products from the US that will be subject to additional 25-percent tariffs in response to the US announcement to impose additional duties on Chinese imports, raising tensions between the world’s two largest economies.

The dollar slipped by 0.07 percent to 110.54 yen, retreating from a three-week high of 110.9 yen. The yen, a perceived safe haven often sought in times of geopolitical tensions and market turmoil, had touched a more than three-week low against the greenback earlier in the session.

The dollar index, which measures the greenback against a basket of six major currencies, was down 0.04 percent at 94.732.

It’s not clear that the rising trade tension has a very clear impact on the dollar broadly, and hile it’s negative for the dollar against some currencies, it is also very positive, at least in the near term against other currencies, said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington.

Offshore Chinese yuan fell to a five-month low against the greenback.

The euro gained against the dollar, rebounding from a nearly two percent drop on Wednesday, its worst one-day drop since June 24, 2016, following Britain’s vote to withdraw from the European Union.

The euro’s slump on Friday came after the European Central Bank signaled it would keep interest rates at record lows into the summer of 2019.

On Friday, however, the outlook for the euro appeared brighter as banks adjusted their forecasts for interest rates to the ECB’s guidance, removing some uncertainty from the market.

Sterling steadied above its lowest level since November, after strong US retail sales and a more hawkish Federal Reserve earlier this week boosted the dollar and underlined policy divergence between the countries. Sterling was 0.09 percent higher at 1.3273 US dollars.

The Canadian dollar weakened to a fresh near one-year low against its US counterpart as trade tensions between US and China intensified and domestic data showed a surprise drop in manufacturing sales.

Wall Street builds immunity to trade friction rhetoric

Fears of tariffs and a rising trade tension have jostled US stocks over the past few months, but there is a sense among investors that the market is taking the drum beat of rhetoric and statements more in stride.

The equity market largely shrugged it off. The benchmark S&P 500 index ended down only 0.1 percent on Friday.

That paled compared to losses earlier in the year that were sparked by fears of a US-China trade dispute that would be detrimental to economic growth.

To be sure, certain areas of the market remain sensitive to rhetoric about trade.

The S&P 500 industrial sector, which includes multi-national companies such as plane maker Boeing and heavy machine manufacturer Caterpillar, has lagged the market since trade dispute flared in March. Industrials dropped 0.25 percent on Friday, worse than the broader index’s decline.

Source(s): Reuters