Euro, yen steady on expectations of US auto tariff delay

The euro is 0.1 per cent higher, having bounced overnight from a one-week low of US$1.1178. — Reuters pic
The euro is 0.1 per cent higher, having bounced overnight from a one-week low of US$1.1178. — Reuters pic

TOKYO, May 16 — The euro and yen steadied against the US dollar today, after US officials said President Donald Trump was expected to delay implementing tariffs on imported cars and parts by up to six months to give trade negotiators more time.

The euro was 0.1 per cent higher at US$1.1208, having bounced overnight from a one-week low of US$1.1178. The single currency was initially hit as Italy's Deputy Prime Minister Matteo Salvini criticised European Union rules for the second day.

“Long term prospects for the euro are not particularly bright, given the region's soft economic fundamentals. But the news on the auto tariff delay is helping the euro establish support at the US$1.1200 threshold,” said Shin Kadota, senior strategist at Barclays in Tokyo.

The US dollar edged down 0.1 per cent to 109.485 yen.

Kyosuke Suzuki, director of FX at Societe Generale in Tokyo, said uncertainty stemming from the escalation in the Sino-US trade war was weighing on the dollar.

The greenback had retreated to a low of 109.150 against the safe-haven yen yesterday as US yields slid on weak US April retail sales and industrial output data. China also reported surprisingly weaker growth in retail sales and industrial output for April, and the discouraging data from the world's two largest economies made investors more wary of riskier assets.

The US dollar index against a basket of six major currencies was nearly flat at 97.542 after posting modest gains the previous day.

The Australian dollar was 0.25 per cent lower at US$0.6913.

The Aussie dropped to a low as US$0.6893, its weakest since early January, after data today showed Australia's unemployment reach an eight-month high in April.

The lacklustre jobs data strengthened views that the Reserve Bank of Australia would be forced to cut interest rates soon.

Opinion polls show Australia's governing Liberal-National coalition is likely to be defeated by the opposition Labour Party in this weekend's general election, and the jobs data made unhelpful reading for ruling parties that campaigned hard on their record of providing sound economic management.

The pound struggled near a three-month low of US$1.2827 brushed yesterday.

Sterling had taken a hit on expectations that British Prime Minister Theresa May will again fail to get her Brexit deal approved and could soon face a leadership challenge, adding to uncertainties. — Reuters

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