The dollar fell to a three-week low on Friday as safe-haven buying eased and risk sentiment improved on hopes of progress in trade negotiations between the United States and China, as well as increased chances of an orderly British exit from the European Union. Sterling rose to a more than three-month high versus the dollar on optimism about Brexit, while the euro advanced to a three-weak peak as risk appetite rose.
At the same time, other safe-haven currencies such as the yen and Swiss franc slid on the day. "We have heard positive rhetoric emanating from the trade talks with China," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.
Top US and Chinese negotiators wrapped up their first day of trade talks on Thursday, with US President Donald Trump welcoming what he called a "very, very good negotiation with China". Trump and China's top trade negotiator, Vice Premier Liu He, are scheduled to meet later on Friday. On Brexit, the 27 countries staying in the EU after Britain leaves gave the go-ahead on Friday for their chief negotiator to hold another round of intense and secret negotiations with London in a bid to secure a deal, two senior diplomatic sources said.
In mid-morning trading, the dollar index was down 0.4% at 98.307, after earlier declining to a 3-1/2-month low of 98.197. The euro, meanwhile, rose 0.4% to $1.1052 , mirroring the three-week high reached on Thursday. The safe-haven yen weakened against the dollar, which gained 0.5% to 108.53 yen. The dollar earlier touched a 2-1/2-month high against the yen. Sterling surged to a more than three-month high of $1.2708 and a five-month peak of 87.02 pence against the euro. The pound was last up 1.7% at $1.2658.
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