TOKYO, Nov 27 — Major currencies hardly budged today as traders looked ahead to the final outcome of US-China trade talks and a shortened holiday week in the United States.
Against the yen the dollar was traded at ¥109.05, off two-week high of 109.205 touched yesterday amid mild optimism that Washington and Beijing could soon sign a deal to put a hold on their 16-month trade spat.
The euro stood at US$1.1023, little changed so far this week. Trade is slowing down ahead of the Thanksgiving holiday tomorrow in the US, before which some major players will have wind down most of their trade for the year.
US President Donald Trump said yesterday Washington was in the “final throes” of work on a deal that would defuse a 16-month trade war with Beijing.
But he also underscored Washington’s support for protesters in Hong Kong, a potential huge sore point with China.
His remarks followed a telephone call yesterday by US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin with Chinese Vice Premier Liu that was disclosed by China’s Commerce Ministry.
Although Trump’s comments kept the bullish mood in the US stock market alive, major currencies were on hold, with many market participants now hesitant to make big bets before they see the actual deal.
“Judging from Trump’s comments, an agreement will have to wait at least until the weekend,” said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.
One major sticking point has been the rollback of tariffs Trump has imposed, with Beijing demanding they be scrapped as a part of the deal.
The United States has imposed tariffs on Chinese goods in a dispute over trade practices that the US government says are unfair. China has responded in kind with its own tariffs on US goods.
“I think markets are betting that a likely compromise will be to continue to negotiate on tariffs. If that turns out to be the case, we could see buy-on-rumour-sell-on-fact type of selling in the dollar/yen,” he added.
If both sides cannot reach an agreement soon, the next important date to watch is December 15, when Washington is scheduled to impose even more tariffs on Chinese goods.
“The market is believing that the December tariffs won’t be activated,” said Minori Uchida, chief currency analyst at MUFG Bank.
With markets preoccupied with the trade issues, soft US consumer sentiment data hardly made any dent in the dollar.
US consumer confidence fell for a fourth straight month in November despite expectations of a small rebound, amid worries about current business conditions and employment prospects.
Another report yesterday showed an unexpected drop in new home sales last month, but data for September was revised higher to show purchases hitting their highest level in over 12 years. — Reuters
