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Forex- U.S. Dollar Rises as Trade Deal Progresses

10 November 2019

The Australian and New Zealand dollars - proxies for risk which had been weakening due to uncertainty surrounding the possible trade deal - also gained on the comments with the Aussie up 0.3% versus the dollar at US$0.6902.

The announcement has fanned hopes that the world's economic superpowers - who are now finalising a mini trade pact as part of a wider deal - can resolve their long-running tariffs war that has hobbled the global growth outlook.

White House spokeswoman Stephanie Grisham told Fox Business Network in an interview on Friday that tariffs could be lifted on Chinese goods if an agreement is reached, but she gave no further details. "Now that the trade war seems to be winding down, people are buying dollars because the USA economy will benefit", said Marshall Gittler, strategist at ACLS Global.

Uncertainty about the fate of the trade negotiations between the United States and China has kept markets on their toes, with European stocks benchmarks mimicking their Asian peers and retreating from the previous session's highs. "The Chinese news has already been factored in and markets are very tentative pricing in headlines that don't necessarily add much", said Simon Harvey, FX market strategist, at Monex Europe in London. "The BoE's "mixed messaging suggests that the bar remains quite high for sterling to register a large and sustained move on the back of today's decision", TD Securities said in a research note".

"Perhaps we do get the phase one deal and a detente, but when we get into next year there will be big issues that both the U.S. and China have big disagreements on", said James Rossiter, head of global macro strategy at TD Securities.

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The Chinese trade service, without spreading out a timetable, said the two nations had consented to drop the levies in stages.

Paris' CAC 40 finished flat at 5,889.70 points, while the EURO STOXX 50 lost 0.2% at 3,699.65 points.

NEW YORK, Nov 7 (Reuters) - Oil prices rose and stocks rallied worldwide on Thursday after China said it had agreed with the United States to cancel tariffs in phases, a key consideration in reaching a deal to end a trade war that has crimped economic growth and roiled markets.

Caution appeared to be the order of the day across world markets. Against a basket of currencies, the dollar was slightly higher at 98.075. "The rising likelihood of a trade deal between the US and China is believed to be beneficial to the USA economy as it reduces the headwinds facing American companies", said Karl Schamotta, chief market strategist, at Cambridge Global Payments in Toronto.

Worries the pact could fall apart are now prompting some investors to sell heading into the weekend.

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"If anything, markets realise that it will take more of a formal process to get things going and make progress".

Wall Street's three main stock indexes hit record highs and a gauge of worldwide equity performance surged to a 21-month peak, with a pan-European index at its highest since July 2015 after regional shares rose for a fifth straight session. Still, it is up 19 basis points this week and set for its biggest weekly rise in a month. The dollar moved to 109.31 yen, arriving at a five-month high of 109.49 the earlier day.

The dollar also advanced to a three-week high against the Swiss franc and was last up 0.3% at 0.9956 franc.

Benchmark 10-year note yields rose as high as 1.973% on Thursday on optimism a deal would be reached, the highest since August 1.

Crude oil was also lower with US West Texas Intermediate (WTI) crude losing 22 cents to $56.93 per barrel.

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A Reuters poll found that the dollar's persistent strength would continue well into next year.

Forex- U.S. Dollar Rises as Trade Deal Progresses