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Dollar holds near recent highs on trade jitters


THE dollar held near recent highs on Monday as uncertainty over the US-China trade war encouraged investors to move into the safety of the greenback, while the New Zealand dollar slid to a four-year low after business confidence tumbled.

Traders have mostly shrugged off news that the Trump administration was considering de-listing Chinese companies from US stock markets after the reports were hosed down by Treasury officials, but investor sentiment remains fragile.

Worries that negotiations between China and the US will not lead to a trade deal, and deepening political uncertainty in the US after the start of an impeachment inquiry into President Donald Trump, have unnerved investors and boosted demand for dollars.

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The US currency, measured against a basket of rival currencies, rose 0.1 per cent to 99.169 in early European trade, while against the euro it was slightly higher at US$1.0929. The dollar earlier this month hit a more than two-year high of 99.37.

"Were there better stories overseas, we suspect the dollar might be a little weaker right now, but there are not (industrial production numbers are still plumbing the depths in many countries) and thus the dollar is holding its gains," ING analysts said in a research note.

New Zealand's dollar dropped 0.6 per cent to as low as US$0.6249, its weakest since 2015, after a survey showed business sentiment weakening to an 111/2 year low in September, strengthening the case for a reduction in interest rates.

"We are seeing from the positioning data that people have increased shorting of the Kiwi," said Ulrich Leuchtmann, a strategist at Commerzbank. "A lot of people are jumping on the train again," he added.

In Australia, forecasts for a rate cut on Tuesday have risen - markets are pricing a better than 75 per cent chance that the Reserve Bank of Australia will reduce its cash rate for a third time this year.

The Aussie fell 0.2 per cent to US$0.6753.

Eurozone inflation numbers for September were largely weaker than expected, but the euro was little moved.

The Japanese yen gave up earlier gains and was last flat on the day at 107.92 yen per dollar.

Sterling rose 0.2 per cent to US$1.2316, recovering some of last week's losses after investors took fright at the standoff in Britain's parliament over Britain's exit from the European Union.

Traders are expecting a lull in trade-war headlines as China takes a week-long holiday from Tuesday, which marks the 70th anniversary of the People's Republic of China.

China's offshore yuan slipped slightly to 7.143 yuan per dollar. REUTERS