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.

"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