NEW YORK (Reuters) - Safe-haven currencies including the U.S. dollar gained on Monday as optimism over a trade deal between the United States and China ebbed.
The greenback, Swiss franc and Japanese yen all weakened on Friday as optimism over the trade talks, together with the European Union and Britain restarting Brexit negotiations, encouraged investors into riskier assets.
U.S. President Donald Trump on Friday outlined the first phase of a deal to end the trade war and suspended a threatened tariff hike, but officials on both sides said much more work needed to be done before an accord could be agreed.
The safe havens gained on Monday, however, after Bloomberg News reported that China wants more talks as soon as the end of October to hammer out the details of the “phase one” deal.
U.S. Treasury Secretary Steven Mnuchin also said on Monday that an additional round of tariffs on Chinese imports will likely be imposed if a trade deal with China has not been reached by the time they are set to start, but added that he expected the agreement to go through.
Analysts said the partial deal between the world’s two largest economies appeared to lack substance with limited progress on structural issues such as technology transfers.
Manuel Oliveri, an analyst at Credit Agricole, said the announcements so far did not amount to “a broad-based trade deal” that would justify last week’s market optimism.
The dollar index against a basket of six major currencies .DXY gained 0.20 percent to 98.501, up from a three-week low of 98.197 reached on Friday.
Trading volumes are likely lighter than usual with Tokyo’s market closed for a public holiday and a holiday in the United States for Columbus Day.
Emerging market currencies and those closely linked to broad risk sentiment, such as the Australian dollar and Swedish crown, slipped, after rallying at the end of last week.
Sterling also dropped against both the dollar and euro GBP=, EURGBP= after Britain and the EU stressed over the weekend that there was a long way to go before they could agree a Brexit deal.
Sterling surged late last week after London and Brussels announced “intense” negotiations to try and agree a Brexit deal before Oct. 31.
Reporting by Karen Brettell; Additional reporting by Tommy Wilkes in London; Editing by Andrea Ricci
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October 14, 2019 at 10:17PM
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