THE US dollar was on track for a weekly gain against major currencies, including the Swiss franc, yen and euro on Friday (May 9), after a US-UK trade deal increased optimism about upcoming US-China talks.
Financial markets headed into the weekend with the focus squarely on the ongoing trade negotiations between Washington and Beijing in Switzerland.
President Donald Trump announced on Thursday a US-UK trade deal that left in place a 10 per cent baseline tariff on British goods, but lowered prohibitive duties on vehicle imports.
“There’s strong optimism across the market of progress in US-China trade talks in particular and more broadly more trade deals,” said Matthew Weller, head of market research at StoneX.
“It does seem like the Trump administration is perhaps extending a series of olive branches to different countries and perhaps the worst of the trade wars and tariffs is … behind us. That’s what the market is starting to price in.”
The US dollar is on track for the fourth straight week of gains against the Swiss franc. But it was down 0.01 per cent to 0.83150 franc on the session.
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The euro was set for the third straight week of losses against the dollar. It was, however, last up 0.17 per cent on the day at US$1.125025. The US currency was on track for a third consecutive week of gains against the Japanese yen although it was down 0.39 per cent to 145.355 yen on the session.
Sterling was trading higher and was set for a weekly gain after losing ground on Thursday following the announcement of the US-UK trade deal. It strengthened 0.50 per cent to US$1.3306.
“The trade war has progressed to the point where policymakers seem eager to show some payoff,” Goldman Sachs analysts led by Kamakshya Trivedi wrote in an investor note. “Even though there are reasons to be sceptical … it will be hard to ignore the policy intent of setting a more positive tone.”
Central bank decisions this week diverged: The Federal Reserve left rates unchanged while the Bank of England cut rates. The central banks of Sweden and Norway held them steady.
In contrast with other G10 currencies, the dollar was lower against several Asian currencies during the week after a shock surge in the Taiwan dollar.
After a volatile few days, it has settled around 30 to the dollar, more than 6 per cent stronger than at the end of April.
The greenback weakened 0.02 per cent to 7.241 versus the offshore Chinese yuan but was set for a weekly gain. The Korean won strengthened 0.12 per cent against the dollar to 1,395.86 per dollar, also on track to finish the week higher.
Bitcoin climbed back above US$100,000, reflecting a refreshed appetite for risk-taking in markets’ more speculative corners. It gained 0.38 per cent to US$103,023.28. REUTERS
