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Cautious optimism on US-China trade talks lifts dollar against yen

New York

THE US dollar ticked up against the safe-haven Japanese yen on Friday as hopes rose for a US-China compromise on trade.

Traders' optimism could also be seen in the Australian dollar, a proxy for Chinese economic prospects, which was 0.14 per cent higher, at US$0.700. But there was a cautious tone to the investor optimism and moves across currencies were muted.

Against a basket of six rival currencies, the dollar was 0.04 per cent weaker at 97.331. Against the yen the dollar was last up 0.13 per cent at 109.89.

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"Risk has actually traded remarkably resiliently," said Alan Ruskin, global head of currency strategy at Deutsche Bank.

Earlier this week, there were "some fairly sizeable risk-off moves, particularly in dollar/yen, (but) there has been no real follow-through today".

Although US President Donald Trump on Friday said he was in no hurry to sign a trade deal with China, negotiators reported progress in the discussions as they wrapped up a second day of talks.

"They were constructive discussions," Treasury Secretary Steve Mnuchin told reporters as he left US Trade Representative Robert Lighthizer's offices near midday.

Chinese Vice-Premier Liu He, his country's lead negotiator, told reporters at his hotel in Washington that the talks had gone "fairly well", Bloomberg reported.

Deutsche Bank's Mr Ruskin said: "There's a sense that talks will continue. As to whether there will eventually be some kind of deal, yes, but there will be a lot of noise in the interim." Mr Trump's tariff increase to 25 per cent from 10 per cent on US$200 billion of Chinese goods kicked in on Friday, and Beijing has said it will strike back.

Elsewhere, the Canadian dollar was higher after employment data showed the country added a record 106,500 jobs in April, which far outstripped analyst expectations. The loonie rallied the most since March, 0.43 per cent stronger at US$1.342. REUTERS