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Euro stays near 4-week low against dollar
THE euro held steady against the US dollar on Monday after matching a four-week low earlier as the greenback maintained its gains on optimism that the United States and China would roll back tariffs that have hurt global growth.
Officials from both countries said late last week that a rollback of some tit-for-tat tariffs had been agreed as part of a preliminary deal, that has still to be finalised, aimed at ending their trade war.
Even though that was subsequently denied by US President Donald Trump on Friday, he did not completely rule out a deal and US benchmark Treasuries held above a key support level at 1.9 per cent, buoying the currency.
Moves were slight as traders kept a wary eye on further news on the US-China trade war, and against the safe-haven Japanese yen the dollar fell as market participants reacted to the escalating political confrontations in Hong Kong.
The euro traded at US$1.1026, flat but not far from the Oct 15 low of US$1.10165 it fell to on Friday.
The Japanese currency was last up 0.3 per cent at 108.93 against the dollar.
"The trade resolution is a little positive for the euro," said Stephen Gallo, European head of FX strategy at BMO Capital Markets.
But China is unlikely to ramp up imports from the euro zone, he added, which means the common currency is unlikely to benefit from the fact that the US and China could decide to end the 16-month long trade war.
"Any bullish reaction in the euro will in our view be a second, third or fourth order response to a resolution of the trade war," Mr Gallo said.
The Chinese yuan weakened 0.3 per cent to 7 per dollar in offshore trade on fresh violence in Hong Kong, where police fired live rounds at protesters, with Cable TV and other media reporting at least one person being wounded.
Disappointing economic data also hurt sentiment toward the yuan, as China's producer prices fell the most in more than three years in October, National Bureau of Statistics (NBS) data showed on Saturday, while the country's consumer prices rose at their fastest pace in almost eight years.
Elsewhere, the British pound was up 0.4 per cent at US$1.2825 despite the fact that Moody's warned on Friday it might again cut its rating on Britain's sovereign debt.
Its rise also came even as data showed Britain's economy grew at the slowest annual rate in nearly a decade in the third quarter. REUTERS