LONDON, Sept 4 — The dollar consolidated near a one-week high against a basket of currencies yesterday as tensions around global trade and a continued selloff in emerging markets fuelled demand for the greenback.

US President Donald Trump said on Saturday there was no need to keep Canada in the North American Free Trade Agreement and warned Congress not to meddle with the talks to revamp Nafta or he would terminate the trilateral pact altogether.

“Trade tensions are broadly supporting the US dollar, but the market is hardly very conducive of risk,” said Viraj Patel, an FX strategist at ING in London.

The US currency's status as the chief reserve currency makes it the primary beneficiary of concern over trade conflicts. Traders have bought the US dollar against the British pound and the Canadian dollar among others.

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The dollar was flat at 95.12 against a basket of major currencies, nearing its highest level since Aug. 27. It has gained nearly 7 per cent since mid-April when trade tensions first arose.

On a positioning basis, markets are firmly in the stronger US dollar camp, with net outstanding positions holding just off the highest levels since January 2017, calculations by Reuters and Commodity Futures Trading Commission data show.

Investors are also jittery about emerging markets, many of which are seeing an exodus of capital. Countries such as Argentina and Turkey are already in crisis, with the Argentine peso falling more than 4 per cent on the day against the US dollar and the Turkish lira losing 2 per cent .

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Pressures are building elsewhere too, with the Indonesian rupiah hitting a 20-year low and the Indian rupee at a record low

“It looks like we're going to see another week of dollar strength against EM ... Add in what should be a strong US jobs report on Friday and we would expect dollar/EM to push further ahead,” ING analysts told clients, referring to payrolls data due at the end of the week.

The euro slipped 0.11 per cent against the dollar after data showed euro zone manufacturing growth slowing to a near two-year low in August as optimism dwindled due to the fears of an escalating global trade war.

Sterling was the standout loser of the day as new concerns about Brexit negotiations and weak UK manufacturing data combined to push the British currency down 0.8 per cent.

Michel Barnier, the European Union's chief Brexit negotiator, said he was "strongly opposed" to the British government's proposals on future trade ties after it leaves the EU.

The pound fell 0.8 per cent to US$1.2855 and weakened 0.8 per cent against the euro to 89.80 pence. — Reuters