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FOREX-Dollar droops on trade deal outlook, Aussie sent lower by RBA

Published 19/11/2019, 04:54 pm
© Reuters.  FOREX-Dollar droops on trade deal outlook, Aussie sent lower by RBA
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* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Hopes for U.S.-China trade deal wax and wane

* Traders looking for signs of trade deal this month

* Dollar/yen locked in narrow rage

By Stanley White

TOKYO, Nov 19 (Reuters) - The dollar nursed losses on Tuesday as receding hopes for a preliminary trade deal between the United States and China hurt demand for the greenback.

The yuan also suffered, touching a two-week low versus the greenback amid doubts about efforts to resolve the U.S.-China trade war.

The Australian dollar fell after minutes from a Reserve Bank of Australia policy meeting showed central bankers considered cutting rates this month. have been high expectations that the United States and China would sign a so-called "phase one" deal this month to scale back their 16-month-long trade war.

But the dollar took a hit on Monday after CNBC reported China is pessimistic about agreeing to a deal, which suggests a resolution to perhaps the biggest risk to the global economy remains elusive. dollar tried to break above 109 yen, but it couldn't because of worries about the trade deal," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.

"The Treasury market is starting to reflect similar concerns about the lack of a trade deal," Ishikawa added. "This will keep dollar/yen in a narrow range."

The dollar JPY=EBS was a shade lower at 108.62 yen, following a 0.09% decline on Monday.

The dollar was quoted at $1.1074 per euro EUR=EBS on Tuesday in Asia after falling to the lowest in almost two weeks.

Against sterling GBP=D3 , the dollar stood at $1.2956, close to a one-month low. The pound has been buoyed by polls pointing to a victory by the ruling Conservatives in upcoming elections.

The dollar index .DXY against six major currencies was little changed at 97.808, close to a two-week low.

In the onshore market, the yuan CNY=CFXS fell to a two-week low of 7.0295 per dollar.

Washington and Beijing have imposed tariffs on each other's goods in a bitter dispute over Chinese trade practices that the U.S. government says are unfair.

The tariffs have slowed global trade and raised the risk of recession for some economies. Many economists say the drag on global growth will remain as long as tariffs are in place.

Currency traders were also wary of the dollar after U.S. President Donald Trump met U.S. Federal Reserve Chairman Jerome Powell on Monday. Trump has repeatedly criticised the Fed for not lowering interest rates enough. was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.," Trump tweeted soon after the meeting, calling the session "good & cordial".

In a statement, the Fed said Powell's expectations for future policy were not discussed, but Trump has for more than a year said the Fed was undermining his economic policies by keeping interest rates too high.

Elsewhere in the currency market, the Australian dollar AUD=D3 fell 0.16% to $0.6799 and declined 0.26% to 73.82 yen AUDJPY= .

Australia's central bank "agreed a case could be made" for another cut in the 0.75% cash rate at its November meeting given unwelcome weakness in wages growth and inflation, minutes published on Tuesday showed.

The RBA decided to hold steady, in part because of worries that further easing would harm savers and confidence.

The central bank has already cut rates three times since June to an historic low.

The Aussie took a hit last week after data showed Australian employment suffered its sharpest fall in three years in October, underlining the need for stimulus.

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