Global trade jitters buoy dollar to near 11-month high

By Richard Leong

NEW YORK (Reuters) - The dollar was steady on Wednesday, hovering near an 11-month peak against a basket of major currencies as China's signal of tolerance of a stronger yuan offset anxiety about the global trade conflict.

The greenback, as well as the yen and Swiss franc, remained well supported as traders braced for another possible round of U.S. tariffs against China.

"We are now entering into concerning territory," said Alessio de Longis, portfolio manager for OppenheimerFunds' global multi-asset group in New York. "This is happening when global growth is already slowing outside the U.S."

Before Wednesday's market open, the People's Bank of China cut the yuan's midpoint rate to 6.4586 per dollar, the weakest since Jan. 12 and much stronger than market models had suggested.

Beijing's move is seen as a bid to stabilize investor sentiment and stem the yuan from sagging further.

On Tuesday, the Chinese currency fell to a five-month low of 6.4948 yuan in the offshore market following U.S. President Donald Trump's threat of a 10 percent tariff on $200 billion of Chinese imports.

U.S. Commerce Secretary Wilbur Ross said the White House will likely keep up pressure on Beijing in an attempt to reach a deal on greater American access to Chinese markets and narrow its trade surplus with the United States.

In this climate of rising trade tensions, heads of major central banks spoke of this risk in their economic outlook at a conference in Sintra, Portugal.

U.S. Federal Reserve President Jerome Powell said "in principle changes in trade policy could cause us to have to question the outlook."

Still Powell and his peers at the European Central Bank and Bank of Japan, Mario Draghi and Haruhiko Kuroda, did not suggest they altered their policy stance even as trade tensions have intensified.

In U.S. afternoon trading, an index that tracks the dollar against the euro, yen, sterling and three other currencies <.DXY> was little changed at 95.090 after touching an 11-month peak of 95.299 earlier on Wednesday.

The euro was marginally lower at $1.1579 and climbed 0.3 percent at 127.81 yen .

The greenback rose 0.3 percent against the Japanese currency at 110.35 yen.

Many emerging currencies steadied after Tuesday's losses due to trade fears. The Mexican peso gained 0.7 percent on the day, while the South African rand rose 0.9 percent.

The Australian dollar, seen as a proxy for market sentiment toward China, fell to a 13-month low of $0.73475 on Tuesday before bouncing back a bit to $0.73715.

The Swiss franc dipped 0.2 percent to 0.9961 per dollar, erasing the prior day's gains.

(Additional reporting by Saikat Chatterjee in LONDON; Editing by James Dalgleish)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Trump meets with travel industry CEOs on push to boost foreign tourism
• Zelenskiy says Ukraine expects meeting with US negotiators in coming days
• Body of convicted war criminal Ratko Mladic returns to Serbia in government plane