Swiss franc leads gains on weak China data, trade talk fears

The Swiss franc rallied by half a percent against the dollar on Thursday as weak Chinese factory data and lack of progress at U.S.-China trade talks encouraged traders to take profits.

The British pound also saw profit-taking, but it is still on track to lead gains against the dollar in February as fears about a no-deal Brexit fade.

“The weak Chinese PMI data and concerns about the progress of U.S.-China trade talks are weighing on risk appetite, and that is pushing the franc higher,” said Esther Maria Reichelt, an FX strategist at Commerzbank.

Factory activity in China reached a three-year low in February as export orders fell at the fastest pace since the global financial crisis, more evidence of an economy facing weak demand at home and abroad.

Sentiment was also hurt by U.S. Trade Representative Robert Lighthizer’s comment that it was too early to predict an outcome in trade talks between Washington and Beijing.

The Swiss franc rallied half a percent against the dollar to 0.9967 and the Japanese yen gained a quarter of a percent to 110.75 yen.

Against a basket of its rivals, the dollar slipped 0.1 percent to 96.03. Traders said some of its weakness was caused by month-end selling after a strong month for risky assets.

Sterling edged lower after reaching a seven-month high on Wednesday as traders bet Britain’s departure from the European Union would be delayed.

“I think we had nothing significant from last night and we’re back into another hiatus until mid-March, so there is some bit of profit taking,” said John Marley, a senior currency consultant at SmartCurrencyBusiness.

Dollar on the back foot after Powell’s comments, sterling surges

The dollar languished near three-week lows on Wednesday as a reaffirmation of a patient stance by Federal Reserve Chairman Jerome Powell and a newly resurgent pound kept U.S. currency bears in firm control.

The dollar index against a basket of six major currencies stood at 96.113 after shedding 0.4 percent overnight, when it stooped to 95.948, its lowest since Feb. 5.

Powell said on Tuesday that rising risks and recent soft data were unlikely to prevent solid growth for the U.S. economy this year, but that the Fed would remain “patient” on further interest rate hikes.

“The dollar’s fall was a little puzzling as Powell’s comments did not offer fresh insight. But the market was in a state where the dollar was sensitive to potential bearish factors, and the strong pound also weighed,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.

Sterling had rallied on Tuesday after British Prime Minister Theresa May offered lawmakers the chance to vote on delaying Brexit, opening up the possibility of avoiding a chaotic no-deal departure from the European Union.

The pound was little changed at $1.1348 after surging more than 1 percent overnight to a five-month peak of $1.3288.

The Australian dollar was a shade lower at $0.7182, taking a breather after three straight days of gains.

The Aussie was hurt at the start of February after the Reserve Bank of Australia opened the door for an interest rate cut. But the currency has rebounded nearly 2 percent from this month’s low of $0.7054 plumbed on Feb. 12.

“Differences in monetary policies are less of a driver for currencies after the Fed shifted to a more dovish stance, prompting other central banks to follow. Risk appetite is now a key incentive, and currencies like the Aussie benefit from ‘risk on,'” said Yamamoto at Mizuho Securities.

Global equities have performed strongly this week – MSCI’s world stock index advanced to a five-month peak – on factors including ebbing U.S.-China trade tensions.

Equity markets performance and monetary policy might come into focus again, especially if investors sell down stocks heavily, analysts say.

“Equities may not be a concern when they are rising but if that were to change, comments by Fed board members pertaining to any additional policy steps will gather attention once more,” said Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities.

The dollar was little changed at 110.58 yen after shedding 0.4 percent the previous day. The greenback rose to a two-month high of 111.24 on Monday but has met firm technical resistance near the 200-day moving average 111.30.

Dollar near 1-week lows before Fed testimony; pound jumps

The dollar held near a one-week low against its rivals on Tuesday as currency markets waited for testimony from Fed Chairman Jerome Powell that might give a further boost to risk appetite.

Risky assets had a strong start to the week with the Chinese currency hitting a seven-month high on Monday after U.S. President Donald Trump confirmed he would delay a planned hike in tariffs on Chinese imports.

Powell will testify before the Senate Banking Committee later on Tuesday, the first day of a two-day appearance before lawmakers. Market watchers expect him to underline the Fed’s sensitivity to asset prices and deliver an upbeat assessment of domestic growth prospects.

“Powell’s comments should bolster an already improving market for risk appetite and we remain constructive on risk,” said Manuel Oliveri, a currency strategist at Credit Agricole in London.

Against a basket of other currencies, the dollar was broadly steady at 96.43 after hitting its lowest level in a week at 96.31 in Asian trading.

Powell and other Fed policymakers have indicated they favour patience before raising key lending rates again due to recent signs of slowing economic growth.

The futures market implies traders are betting the central bank will not raise interest rates at all in 2019.

Improving risk appetite was more evident in the British pound after Bloomberg News reported that British Prime Minister Theresa May was considering delaying the March 29 deadline for the UK’s exit from the European Union.

The pound was last up half a percent on the day at $1.3152 and it gained by a similar amount against the euro to 86.30 pence.

The Sun newspaper also reported May will propose formally ruling out a “no-deal” Brexit scenario which could potentially lead to a delay in the UK’s exit from the EU by months.

The euro was broadly flat at $1.1363 after advancing 0.2 percent on Monday.

Aussie rises after Trump delays China tariffs; yuan at 7-month high

The Aussie dollar and the Chinese yuan rose on Monday after U.S. President Donald Trump said he will delay an increase in tariffs on Chinese goods, citing “productive” trade talks, and that he and Chinese President Xi Jinping would hold a summit to seal a deal.

Australian dollar, considered a more liquid proxy for China risks, gained as much as 0.5 percent to $0.7162, reacting to Trump’s posts on Twitter, which came in early Asian trade on Monday.

The onshore yuan jumped as much as 0.6 percent to 6.6730 yuan against the dollar, its highest level since mid-July.

Trump’s announcement was the clearest sign yet that China and the United States are closing in on a deal to end a months-long trade war that has slowed global growth and disrupted markets.

Trump had planned to raise U.S. tariffs to 25 percent from 10 percent on $200 billion worth of Chinese imports if an agreement was not reached by Friday.

The dollar index against a basket of six major currencies barely moved and was at 96.488.

The Japanese yen stood almost flat at 110.67 yen to the dollar, while the euro firmed 0.1 percent to $1.1342.

Trump’s delay of higher tariffs “didn’t come as a total surprise,” said Shinichiro Kadota, senior forex and rates strategist at Barclays in Tokyo. “So I expect the market reaction should be somewhat limited and that the focus would shift back to global economic fundamentals.”

In his latest round of tweets, the president said that progress had been made on a host of divisive areas including intellectual property protection, technology transfers, agriculture, services and currency.

Trump did not set a new deadline for the talks to conclude, but he told U.S. state governors gathered at the White House that there could be “very big news over the next week or two” if all went well in the negotiations.

China’s official Xinhua news agency said in a commentary that the goal of an agreement was getting “closer and closer”, but also warned that negotiations would get more difficult as they approached the final stages.

Elsewhere, the New Zealand dollar rose 0.3 percent to $0.6864, also helped by a jump in retail sales in the fourth quarter, tempering concerns of softer growth in the country’s economy.

The British pound was idling at $1.3068 as markets awaited some clarity on where Brexit talks were heading.

Prime Minister Theresa May put off a vote on her Brexit deal until as late as March 12 – just 17 days before Britain is due to leave the EU – setting up a showdown this week with lawmakers who accuse her of running out the clock.

The Telegraph reported that May was considering whether to delay Britain’s exit for up to two months.

Markets are also awaiting testimony by U.S. Federal Reserve Chairman Jerome Powell on Tuesday and Wednesday before the congressional panels on economy and monetary policy.

Friday will see a spate of health reports on global manufacturing activity, including one from the U.S. Institute for Supply Management (ISM). Flash surveys suggested industrial downturns were deepening in Japan and Europe.

Dollar retains gains, Aussie finds footing after slide

Higher U.S. bond yields underpinned the dollar on Friday, while its Australian counterpart steadied after its recent sharp slide on upbeat central bank comments and easing concerns about China’s ban on Australian coal imports.

The dollar index against a basket of six major currencies was little changed at 96.608 after edging up about 0.15 percent overnight when long-term Treasury yields surged to a one-week high on news of progress in U.S.-China trade talks.

However, the greenback’s gains were capped after Thursday’s soft U.S. economic data, including an unexpected fall in core capital goods orders and weak existing home sales, which affirmed expectations that the Federal Reserve will hold interest rates steady.

“The currency market is entering a phase when it is becoming a little numb to political developments such as U.S.-China trade talks and Brexit,” said Takuya Kanda, general manager at Gaitame.Com Research.

“It’s back to fundamentals, particularly for the dollar, with each data release until next week’s non-farm payrolls report likely to slowly build directional cues.”

The euro was 0.05 percent higher at $1.1340 and on track to gain 0.4 percent on the week.

Traders are watching out for Germany’s Ifo business climate index due later in the session for any potential catalysts for the common currency.

The dollar was effectively flat at 110.73 yen following modest overnight losses. It was headed for a gain of roughly 0.2 percent this week.

The yen barely budged after data showed Japan’s core consumer prices rose 0.8 percent in January from the previous year, with the outcome in line with forecasts.

Japanese inflation remains distant from the Bank of Japan’s 2 percent target, reinforcing market expectations the country is nowhere near an exit from ultra-loose monetary policy.

The Australian dollar was up 0.1 percent at $0.7094 after sliding more than 1 percent to a 10-day low the previous day on fears a ban on the country’s coal by a Chinese port would hurt Australia’s already slowing economy.

The Aussie’s bounce came after the government downplayed the ban, Rodrigo Catril, currency strategist at National Australia Bank, said. In addition, upbeat remarks from the country’s central bank chief earlier in the day also boosted the currency.

The pound was steady at $1.3036 after inching lower overnight.

Sterling has swung wildly between a low of $1.2895 and a high of $1.3109 this week as British Prime Minister Theresa May tries to persuade European Commission chief Jean-Claude Juncker to modify her withdrawal deal and then get the tweaked agreement through parliament.

Dollar inches up after Fed minutes, trade issues back in view

The dollar inched up on Thursday after minutes from the Federal Reserve’s last meeting revived expectations for a possible U.S. rate hike this year while investors shifted their focus back to trade issues for fresh directional cues.

The greenback had risen slightly against the yen and trimmed losses versus the euro late on Wednesday after the Fed, in the minutes of its latest meeting in January, said the U.S. economy and its labor market remained strong, prompting some expectations of at least one more interest rate hike this year.

The dollar index against a basket of six major currencies added 0.1 percent to 96.569, crawling away from a two-week trough of 96.286 marked on Wednesday.

The Fed caught markets off guard last month after it took a dovish turn in its commentary, widely read as a sign it would suspend a three-year campaign to raise interest rates.

“The dollar drew some lift as the minutes appeared to have appeased market participants who were clinging to views that the Fed would hike rates one more time this year – but all in all, the minutes were in line with what the Fed said in January,” said Daisuke Karakama, chief market economist at Mizuho Bank.

“The market’s focal point will now shift back to trade. The U.S.-China trade negotiation deadline could be extended and that may mean Europe and Japan could be faced with trade issues.”

U.S. President Donald Trump on Wednesday said the United States would impose tariffs on European car imports if it cannot reach a trade deal with the European Union.

The dollar was a shade weaker at 110.75 yen after rising 0.25 percent overnight.

The euro was little changed at $1.1337 after being nudged off a two-week high of $1.1371 scaled earlier on Wednesday.

A big mover in Asia was the Australian dollar, which was last down 0.15 percent at $0.7151.

The Aussie rallied early in the session to a two-week peak of $0.7207 on strong domestic January employment data. But the currency quickly lost altitude, with traders attributing the slide to interest rate cut forecasts made by Westpac.

Reserve Bank of Australia (RBA) Governor Philip Lowe had sent the Aussie tumbling early in February by stepping back from the central bank’s long-standing tightening bias, saying the next move in interest rates could be either down or up.

“It is difficult for the Aussie to keep rising indefinitely when the RBA has seemingly switched to a dovish stance,” said Shin Kadota, senior strategist at Barclays.

The pound dipped 0.15 percent to $1.3031 pulling back further from a near three-week high of $1.3109 touched the previous day.

Sterling took a knock after three lawmakers defected from British Prime Minister Theresa May’s ruling Conservative party in a move that could undermine her Brexit strategy.

The pound was also weighed after Fitch Ratings said on Wednesday it may downgrade the United Kingdom’s “AA” debt rating based on growing Brexit uncertainty.

Dollar sags on lower US yields, Fed minutes in focus

The dollar sagged against its peers on Wednesday in the wake of falling U.S. yields and as investors remained cautious ahead of the Federal Reserve’s policy meeting minutes due later in the session.

The U.S. currency has also been weighed down as safe-haven demand for the liquid dollar has ebbed on optimism that a fresh round of talks between China and the United States would help resolve their trade conflict.

The dollar index versus a basket of six major currencies was a touch lower at 96.495 after shedding about 0.4 percent overnight.

“The dollar is weighed with Treasury yields on a downturn. Attempts by participants to price in potentially dovish FOMC (Federal Open Market Committee) meeting minutes are also keeping the dollar on the defensive,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

The benchmark 10-year U.S. Treasury yield fell sharply to an 11-day low on Tuesday ahead of the Fed meeting minutes, which are due later on Wednesday.

The minutes from the January Fed meeting will be closely watched following a dovish statement from the central bank at their January policy-setting meeting.

The dollar was steady at 110.61 yen, unable to remain near a high of 110.825 touched the previous day after Bank of Japan Governor Haruhiko Kuroda said the central bank was ready to ramp up stimulus if sharp yen rises hurt the economy.

“It’s hard for the dollar to retain its gains against the yen as the downward pressure from lower U.S. yields is quite strong,” Ishizuki at Daiwa Securities said.

The euro was unchanged at $1.1341 after advancing 0.25 percent on Tuesday, when it brushed a near two-week peak of $1.1358.

The pound was effectively flat at $1.3063 after rallying the previous day to a two-week high of $1.3073.

Sterling had surged more than 1 percent on Tuesday on hopes that British Prime Minister Theresa May will make progress in seeking changes to her Brexit deal with the European Union.

Offshore Chinese yuan extended the previous day’s gains to touch 6.74 per dollar, its strongest since Feb. 1.

The yuan had been lifted on Tuesday after Bloomberg reported that said the United States is pressing to secure a pledge from China that it will not devalue its yuan as a part of a trade deal.

Euro’s bounce slows as focus shifts back to economy, ECB policy

The dollar held steady against its peers on Tuesday, lacking strong direction as U.S. markets were shut for a holiday the previous day, while the euro’s latest bounce slowed as the focus drifted back to the economy and European Central Bank policy.

The dollar index versus a basket of six major currencies was little changed at 96.784 after ending the previous session flat. The U.S. financial markets were closed on Monday for Presidents’ Day.

The euro was little changed at $1.1312 after edging up 0.16 percent overnight, when it pulled away from a three-month low of $1.1234.

The single currency was buoyed by improved investor sentiment as expectations increased for an easing of the U.S.-China trade conflict after both sides reported progress in talks.

The dollar, the world’s most liquid currency, has tended to perform well during bouts of investor nervousness.

“The euro’s latest bounce was not based a positive incentive specific to the currency and the market will likely return to pricing in the potential negatives. The euro will remain on a shaky footing,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.

“There is still some way to go before potential negatives are factored into the euro ahead of the March 7 ECB meeting.”

ECB policymakers will next meet on March 7, when the bank’s staff are expected to slash growth and inflation projections as the euro zone suffers its biggest slowdown in half a decade.

The dollar was a shade lower at 110.59 yen after gaining a modest 0.15 percent overnight.

The Australian dollar was flat at $0.7129 after dipping 0.15 percent the previous day.

The immediate focus was on the minutes from the Reserve Bank of Australia’s (RBA) monetary policy meeting held at the start of the month.

Governor Philip Lowe on Feb. 6 opened the door to a possible rate cut by acknowledging growing economic risks, in a remarkable shift from its long-standing tightening bias that sent the Aussie tumbling.

Dollar weakens as trade deal hopes buoy riskier assets; Aussie, kiwi firm

The dollar fell versus a basket of its peers on Monday as rising expectations of a U.S.-Sino trade deal led investors to shift away from the safety of the greenback into riskier assets.

Both the United States and China reported progress in five days of negotiations in Beijing last week, although the White House said much work remains to be done to force changes in Chinese trade behavior.

Negotiations will continue in Washington as investors hope for an end to the trade war between the world’s two largest economies.

“Trade is the big focus for the markets…with talks shifting from Beijing to Washington, we could get more news flow,” said Michael McCarthy, chief markets strategist at CMC Markets.

“I expect the euro to remain under pressure this week while dollar/yen could also fall if we see risk-aversion based on negative trade news flow.”

The Aussie gained 0.2 percent to $0.7154, after firming 0.48 percent on Friday on hopes of a U.S.-China trade breakthrough. The kiwi dollar gained around 0.3 percent on the dollar to $0.6886.

In Asia, the yen was steady versus the greenback at 110.53.

The escalating trade dispute between the world’s largest economies have kept markets highly volatile since last year.

U.S. duties on $200 billion worth of Chinese imports are set to rise from 10 percent to 25 percent if no deal is reached by March 1 to address U.S. demands that China curb forced technology transfers and better enforce intellectual property rights.

The dollar index, a gauge of its value versus six major peers, was down by 0.16 percent at 96.74.

The index has gained 1.2 percent so far this month despite weaker-than-expected U.S. data as well as a more cautious Federal Reserve, which is widely expected to keep rates steady this year due to a slowdown in growth and muted inflation.

The dollar index has gained mainly because of the euro, which has around 58 percent weightage in the index.

The single currency was up 0.2 percent at $1.1317 in early Asian trade, after two straight weeks of losses.

Despite Monday’s gains, traders are betting on a weaker euro in the coming months as they expect the European Central Bank to keep its monetary policy accommodative due to low growth in the common area, tepid inflation and political uncertainties.

On Friday, Benoit Coeure, a member of the European Central Bank’s executive board, said a new round of cheap multi-year loans to banks was possible. Coeure added that the euro zone’s recent economic slowdown is more pronounced than earlier expected, suggesting the path of inflation will also be more shallow.

The ECB will next meet on March 7 and policymakers are widely expected to slash growth and inflation projections as the euro zone is suffering its biggest slowdown in half a decade.

Elsewhere, sterling was up by 0.2 percent to $1.2914, building on its gains from Friday.

The pound rallied 0.6 percent on Friday, helped by reports of some hedge fund buying, a conciliatory tone on Brexit from the Irish foreign minister and stronger-than-expected British retail sales data.

Dollar rises after dismal data, trade talks in focus

The dollar recovered on Friday after dismal U.S. retail sales and major currencies remained range-bound as the market awaited developments in trade talks between Washington and Beijing.

The results of a meeting on Friday between U.S. Treasury Secretary Steve Mnuchin and China’s President Xi Jinping could be important for foreign exchange investors.

Earlier in the week, markets had cheered U.S. President Donald Trump’s upbeat assessment of the talks but a lack of progress since then has bred a risk-off mood causing declines in the Australian dollar, a proxy for China risk.

U.S. tariffs on $200 billion worth of imports from China are scheduled to rise to 25 percent from 10 percent if the two sides do not reach a deal by March 1.

The dollar traded up 0.11 percent at 97.09 against a basket of major currencies. After rising 1.6 percent in February, the dollar fell broadly on Thursday when poor U.S. retail sales suggested a sharp slowdown in economic activity at the end of 2018.

“Calling the next move in the dollar is pretty tough right now. The start of the year saw investors move into under-valued risk assets, but right now the mood is shifting towards one of secular stagnation,” said Chris Turner, head of foreign exchange strategy at ING.

Any negative news flow out of the trade discussions on Friday could push the dollar back up again, given investor demand for safe-haven assets during times of uncertainty, Turner said.

The euro was 0.21 percent lower at $1.1275.

The single currency was headed for a second week of losses and down 1.7 percent year to date thanks to weaker-than-expected euro zone data.

Analysts expect the European Central Bank to keep monetary policy accommodative for the rest of the year, which is likely to keep a lid on the euro.

Elsewhere, sterling rose 0.1 percent at $1.282. It had been broadly flat after British Prime Minister Theresa May suffered a largely symbolic defeat on her Brexit strategy on Thursday.

The United Kingdom is on course to leave the European Union on March 29 without a deal unless Prime Minister Theresa May can persuade the bloc to amend the withdrawal agreement she negotiated with Brussels last year.