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EU - FX: Dollar stalls after Trump speech reveals little on trade

3minutos - Source: CNBC




GP Chinese Yuan - USD 190807
U.S. one-hundred dollar banknotes and Chinese one-hundred yuan banknotes are arranged for a photograph in Hong Kong on April 15, 2019.
Paul Yeung | Bloomberg | Getty Images
The dollar was little changed after U.S. President Donald Trump in a speech on Tuesday offered no new details on the state of the administration’s trade war with China.
The dollar index held onto modest gains made earlier on Tuesday, but was last trading at 98.310 against a basket of six currencies, up 0.11% on the day, and a hair above 98.304, its level at noon when Trump’s remarks began.
Speaking at The Economic Club of New York, Trump instead took aim once again at the Federal Reserve, bemoaning the fact that the United States has higher interest rates than other developed economies.
“Give me some of that. Give me some of that money. I want some of that money. Our Federal Reserve doesn’t let us do it.”
The speech was highly anticipated by the foreign exchange market, which has moved with trade headlines. The paucity of details on trade in itself was seen by some as a pessimistic signal.
“I don’t think we’ve learned anything new from Trump’s speech. The only thing that’s maybe new is that he did not announce a date and a time for a signing ceremony. Where markets had been hoping for that, those hopes were dashed,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets.
“We had a little bit of a fade in risky assets when he started talking and it was confirmed that he was not about to announce phase one.”
The S&P 500 index fell as Trump spoke, though remained positive on the day. The Dow and Nasdaq indexes had also fallen. Some of that risk-off sentiment was seen boosting safe-haven assets modestly. The dollar was 0.08% weaker against the Japanese yen and 0.09% lower versus the Swiss franc.
The dollar was lifted last week when comments from the Chinese trade ministry were interpreted as a sign of progress on rolling back China-U.S. tariffs, causing traders to dump safe-haven currencies like the yen. However, uncertainty hit again on Friday when Trump said that he had not agreed to reduce tariffs.
The offshore Chinese yuan was weaker against the dollar at 7.018, down 0.17%. The threshold of 7 yuan per dollar was crossed for the first time in August. The yuan had also weakened earlier Tuesday on political unrest in Hong Kong and after weak economic data in mainland China.

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