US dollar snaps three-day losing streak
London
THE US dollar snapped a three-day losing streak against rivals on Tuesday thanks to gains in the Swiss franc and the Japanese yen but remained trapped within well-worn ranges before the release of minutes from the latest US central bank meeting.
At its end-October policy meeting, the Fed cut interest rates for the third time this year, and hedge funds have ramped up bearish bets versus the US dollar in the last three weeks in anticipation of more greenback weakness.
Waning hopes of a preliminary trade deal between the United States and China have also weighed on the US dollar, knocking it from a one-month high tested last week.
"Trade headlines are buffeting markets though there is a general feeling the worst is behind us on the trade war front but there needs to be a firm catalyst to move markets out of their ranges," said Neil Mellor, a senior FX strategist at BNY Mellon in London.
Expectations had grown that Washington and Beijing would sign a so-called "phase one" deal this month to scale back their 16-month-long trade war but those hopes received a setback on Monday after CNBC reported that China is pessimistic about agreeing to a deal.
The US dollar drifted 0.1 per cent higher to 97.87 against its rivals after three consecutive days of losses. Its gains were most pronounced against the perceived safe-haven currencies of the franc and the yen, rising 0.2 per cent against both.
Despite the gains, the US dollar and the broader currency complex remained mired within recent trading ranges.
Deutsche Bank estimates that currency market volatility for the major G-10 currency pairs is at its lowest levels in 45 years.
Against the US dollar, the major G-10 currencies are on track for an average annual range of nearly 8.5 per cent, compared to a post-Bretton Woods range of 15.2 per cent and a peak of 30.7 per cent in 2008.
Elsewhere, Australia's central bank agreed "a case could be made" for another cut to its 0.75 per cent cash rate at its November meeting given unwelcome weakness in wages growth and inflation, minutes published on Tuesday showed.
The Australian dollar fell 0.16 per cent to US$0.6799 and declined 0.26 per cent to 73.82 yen.
Sterling held firm around US$1.2950 with the pound buoyed by polls pointing to a victory by the ruling Conservatives in upcoming elections.
In the onshore market, the yuan fell to a two-week low of 7.0295 per US dollar. REUTERS
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