Dollar slips as investors wait for fresh news on trade talks

NEW YORK (Nov 6) - The dollar drifted lower Wednesday, with the market in consolidation mode, as investors sought more clarity about ongoing U.S.-China trade negotiations.

The yen, a safe haven, was higher on the day against the dollar as some uncertainty crept back into the market.

Still, as the United States and China work to narrow their differences enough to sign a “phase one” trade deal as early as this month, hopes of a breakthrough have boosted sentiment across world markets.

“What you saw over the last two days is a bit of confusion on the China phase one deal...and that started affecting risk appetite,” said Juan Perez, senior currency trader, at Tempus Inc in Washington.

After sizable moves on Tuesday, which included a strengthening in China’s offshore yuan to three-month highs against the dollar, currency markets moved into wait-and-see mode.

That sentiment was echoed in global stock markets, which steadied after a three-day rally.

“Tangible signs of progress — beyond the incessant promise from administration officials that headway is being made — on the partial trade deal remains elusive,” said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.

“This may mean that pro-risk sentiment is built on rather fragile foundations,” he added.

In mid-morning trading, the dollar index, which measures the greenback’s value against other major currencies, was 0.1% lower at 97.875, after hitting a three-week high on Tuesday.

Reuters