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Dollar skids to 3-month low on Brexit sentiment and trade optimism
THE dollar dropped to a three-month low on Friday, as safe-haven buying eased and risk sentiment improved on optimism about US-China trade negotiations as well as increased chances for an orderly British exit from the European Union.
The dollar, however, cut losses against the euro and pared gains versus the yen after US President Donald Trump announced a partial agreement on trade with China, specifically on intellectual property, financial services, and huge agricultural purchases.
Edward Moya, senior market analyst at OANDA in New York, said the dollar's moves after Mr Trump's announcement were in line with the typical "buy the rumour, sell the news" reaction. "We pretty much got what many people were expecting about a partial deal," he said. "But it doesn't necessarily provide optimism that in the short run a broader deal will be reached because there are greater issues. It's still positive though."
Sterling rose to a more than three-month high versus the dollar on optimism about Brexit, while the euro advanced to a three-week peak as risk appetite rose.
At the same time, other safe-haven currencies such as the yen and Swiss franc slid on the day.
Before the trade deal announcement, Mr Trump and other US officials on Friday had signalled good news was coming in trade talks with China, while Beijing indicated it was open to a "partial" deal that would avoid a planned hike in tariffs on its goods.
On Brexit, the EU agreed on Friday to hold another round of intense negotiations with London in a bid to secure a deal.
EU negotiator Michel Barnier and his British counterpart Stephen Barclay earlier held what both sides called a "constructive" meeting in Brussels as Britain's scheduled departure date of Oct 31 nears. The British and Irish prime ministers said on Thursday they had found "a pathway" to a possible deal, and by Friday some officials were expressing guarded optimism. REUTERS