Safe-haven yen, Swiss franc slide as U.S.-China nears trade deal
By Gertrude Chavez-Dreyfuss NEW YORK (Reuters) - The safe-haven yen and Swiss franc slid against the dollar on Tuesday as growing signs the United States and China are inching closer to a trade deal boosted risk appetite and spurred investors to seek higher-yielding currencies. Gains against the yen and Swiss franc pushed the dollar index to a three-week high, tracking the rise in benchmark U.S. 10-year Treasury yields.
By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - The safe-haven yen and Swiss franc slid against the dollar on Tuesday as growing signs the United States and China are inching closer to a trade deal boosted risk appetite and spurred investors to seek higher-yielding currencies.
Gains against the yen and Swiss franc pushed the dollar index to a three-week high, tracking the rise in benchmark U.S. 10-year Treasury yields. Trade-oriented currencies such as the Australian dollar surged as well, with the Chinese currency climbing to a three-month high against the greenback.
A decision by the Chinese central bank to trim lending rates by only 5 basis points also increased overall risk-taking.
For a graphic on yuan:
China is pushing U.S. President Donald Trump to remove more tariffs imposed in September as part of a "phase one" U.S.-China trade deal, which is expected to be signed later this month, people familiar with the negotiations said.
"Growing trade deal optimism continues to be the driver behind rising U.S. 10-year yields this week and we think this morning’s move above 1.83% is getting the fund longs excited about a breakout move higher into the 109s (in dollar/yen)," said Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto.
In afternoon trading, the U.S. dollar rose 0.6% against the yen to 109.21 yen
The yen and Swiss franc tend to strengthen in times of geopolitical tension and financial stress.
The dollar index gained 0.5% to 97.969 <.DXY>.
The yuan traded in the offshore market jumped to its strongest level since Aug. 5 at 6.9838
The currency held its gains even after China's central bank cut its one-year medium-term lending facility (MLF) rate for the first time since early 2016, though it opted for a 5 bps cut, which Commerzbank called "tiny."
China and the United States have imposed tariffs on each other's goods in a trade war that has dragged on for 16 months and raised the specter of a global recession.
Kit Juckes, head of FX strategy at Société Générale, said the agreement would probably mark a truce rather than peace but added that "the chance of getting a first-stage deal seems to be quite good."
The optimism spilled over into other currencies, with the Australian dollar
The euro, however, was down 0.4% against the dollar at $1.1091
Societe Generale's Juckes said the euro would be one of the last currencies to benefit from improved risk sentiment, noting that Monday's data showing Polish manufacturing activity in its sharpest downturn in 10 years had taken the wind out of the euro.
Central European states such as Poland are a key market and investment destination for euro zone companies.
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Elizabeth Howcroft in London; Editing by Dan Grebler)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.