Currency market on hold in New York awaiting trade details

The foreign exchange market held steady on Monday, with the US dollar slightly lower, in anticipation of further details on the US-China trade agreement. The "phase one" trade deal between Washington and Beijing has been "absolutely completed," National Economic Council Director Larry Kudlow told Fox News Channel on Monday, adding that US exports to China will double under the agreement.

The deal, announced on Friday after more than two and a half years of on-off negotiations between Washington and Beijing, will reduce some US tariffs on Chinese goods in exchange for increased Chinese purchases of US agricultural, manufactured and energy products by some $200 billion over the next two years.

But although China's trade delegation expressed optimism about the deal, some government officials were cautious. The deal "is a phased achievement, and does not mean that the trade dispute is settled once and for all," said a Reuters source in Beijing with knowledge of the situation.

Caution over the future of trade talks pushed the dollar index down 0.15%, last at 97.030. The trade-sensitive Chinese yuan and Australian dollar were both off last week's four-month peaks.

"FX investors took one look at the semi-conclusion of a 'phase one' deal on Dec. 12 and were overjoyed, but came back to the table on Dec. 13 with the feeling of having more questions than real answers," said Stephen Gallo, European head of foreign exchange strategy at BMO Capital Markets.

The euro, which had spiked on Friday to a four-month high of $1.1199 against the dollar, retraced most of those gains, last at $1.1146, nevertheless up modestly over the course of Monday's trade. The yen, a safe-haven asset which benefits from market uncertainty, reached a two-week low on Friday. It was fractionally stronger on Monday to last trade at 109.57 yen per dollar.

Monday's muted moves may be evidence of investor caution, of "nobody really wanting to take too much of a large position going into the end of the year given the lack of liquidity. So you're seeing just some continuation as well as some position squaring," said Charles Tomes, portfolio manager at Manulife Asset Management.

Elsewhere, sterling remained bolstered by expectations that last week's resounding electoral win for British Prime Boris Johnson's Conservative Party will end near-term Brexit uncertainty. The pound was last trading at $1.335, 0.19% firmer on the day.