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US$ up on solid data, US tariffs report

New York

THE dollar rose against a basket of currencies on Friday, rebounding from a near 1-1/2-month low, due to upbeat US economic data and safe-haven demand on reports that US President Donald Trump wants to slap duties on US$200 billion of Chinese goods.

Higher Treasury yields also lifted the dollar with the 10-year yield touching 3 per cent for the first time in six weeks.

Reports that Mr Trump told aides to proceed with tariffs on Chinese goods came after Chinese officials welcomed an invitation from Treasury Secretary Steven Mnuchin for new talks to resolve the Sino-US trade conflict. The reports pushed China's offshore yuan even lower after initially falling on mixed economic data.

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"Generally today's data showed strong results, which are supporting the dollar," said Brian Daingerfield, macro strategist at NatWest Securities in Stamford, Connecticut.

US domestic retail sales rose 0.1 per cent in August, the smallest gain in six months, but July figures were revised higher, supporting the view of solid consumer spending in the third quarter.

The University of Michigan's US consumer sentiment data in early September and last month's industrial output gain also proved to be bright spots.

Chicago Fed president Charles Evans on Friday cautioned that the central bank's rate hikes would take a toll on US growth by 2019.

An index that tracks the dollar against six major currencies was up 0.4 per cent at 94.926 on Friday, trimming its weekly decline to 0.4 per cent.

The dollar index fell to a near six-week low on Thursday as encouraging developments between Britain and the European Union on the terms for Britain's exit from the economic bloc boosted the euro and sterling, and pared safe-haven demand for the dollar.

The euro climbed to a two-week high earlier on Friday before retreating against the greenback. The common currency was down 0.5 per cent at US$1.16325, EBS data showed.

Sterling was 0.3 per cent lower at US$1.3063 after hitting US$1.3145 earlier on Friday, its highest level since July 31, according to Reuters data. REUTERS