Dollar rises on progress in US-China trade pact

Updated 28 Oct, 2019

The statement provided no details on the areas in which progress was made. The dollar index was 0.20% higher in afternoon trade to 97.826. Against the euro, the dollar was 0.21% higher to $1.108. "At the end of the day, much of the drive for foreign exchange rates this past year has come from global trade tensions, so anything that affects that narrative positively or negatively is going to be a bigger driver than day-to-day data at this point," said Shahab Jalinoos, global head of foreign exchange strategy at Credit Suisse, noting that the next major event would be the Apec summit in mid-November.

The dollar had strengthened earlier in the day against the pound, but some of those gains were reversed after the European Union agreed to London's request for a Brexit deadline extension but set no new departure date, giving Britain's divided parliament time to decide on Prime Minister Boris Johnson's call for a snap election. Against the pound, the dollar was up 0.19% to $1.283. Some focus will shift next week to the US Federal Reserve's two-day policy meeting.

The central bank is expected to announce on October 30 the third interest rate cut of the year. Money markets have largely priced in a quarter-percentage-point reduction, according to Refinitiv data. "I think the Fed is largely priced to deliver a cut. If it doesn't the dollar would benefit," said Jalinoos, "unless it is very dovish in not delivering a cut. If it delivers a cut and it sounds like it's the end of a cutting cycle, that would also be dollar positive."

Copyright Reuters, 2019

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