Dollar near 1-month low amid trade and growth uncertainty

LONDON (Reuters) – The dollar traded near one-month lows on Wednesday as markets remained jittery about the progress of Sino-US trade talks and waited for US data that could show whether the prolonged trade spat is starting to damage consumption in the United States.

A Bloomberg report that the two sides were close to agreeing on the amount of tariffs that would be rolled back in a phase-one trade deal boosted the offshore-Chinese yuan by 0.2% to 7.05.

It had languished around seven-week lows to the dollar after US President Donald Trump said on Tuesday a trade agreement may be delayed until after November 2020 US elections.

But the report failed to significantly budge the greenback. Against a basket of its rivals, it traded at 97.753, above Tuesday’s trough of 97.644, its lowest since November 11.

“We have been down this road before on the trade agreement headline front, so markets will take these headlines with a pinch of salt and investors are focusing on the US data,” said Manuel Oliveri, a FX strategist at Credit Agricole in London.

US nonmanufacturing ISM data is the highlight for currency traders to gauge whether the weak manufacturing ISM print earlier this week will spill over into the services sector ahead of the important monthly US jobs data later this week.

The greenback declined nearly 1% in the first two trading days this week, as decent eurozone data and surprisingly strong China survey figures raised hopes that the global economy will pick up traction next year and boost demand for non-US currencies.

The Swiss franc was quoted at 0.9875 versus the dollar, near its highest level since November 4.

Both the Japanese and Swiss currencies tend to be bought as safe havens during times of uncertainty.