Investing.com – The dollar was holding steady against a currency basket on Thursday as investors continued to watch developments in Sino-U.S. trade negotiations, while the British pound edged higher ahead of the Bank of England’s latest policy meeting.
The U.S. dollar index against a basket of six major currencies was steady at 97.74 by 03:13 AM ET (08:13 GMT).
Washington and Beijing must simultaneously cancel some existing tariffs on each other’s goods for both sides to reach a “phase one” trade deal, the Chinese commerce ministry said on Thursday. China indicated it was ready to negotiate how much tariffs should be canceled.
The comments came after reports on Wednesday that a meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign an interim trade deal could be delayed until December.
“The dollar is looking for direction,” said Takuya Kanda, general manager of the research department at Gaitame.com Research Institute in Tokyo.
“The main catalyst for dollar buying was expectations that a U.S.-China trade deal is signed this month. If that is delayed by one month, that is not such a disappointment, but we need to see what the Chinese government has to say.”
The two sides have imposed tariffs on each other’s goods in a 16-month long trade war that rippled across financial markets, slowed global investments and growth. Negotiations have been fractious, making an agreement far from certain.
The dollar was little changed against the yen, at 108.93. The euro was a touch higher against the greenback at 1.1073.
German industrial output fell more than expected in September, data showed on Thursday, pointing to ongoing weakness in the sector and indicating that the Eurozone’s largest economy will slip into recession in the third quarter.
Sterling rose 0.14% to 1.2864 against the dollar, after briefly touching the lowest since Oct. 29. Against the euro, sterling was at 0.8604, trading in a narrow range before a BoE meeting later Thursday.
No change in policy is expected, but investors are focused on how the BoE will respond to uncertainties posed by Britain’s fraught exit from the European Union.
Traders are also awaiting results of a general election on Dec. 12, which will determine whether the ruling Conservative Party can capture a majority in Parliament and conclude Brexit by the Jan. 31 deadline.
The central bank’s updated forecasts are likely to show it is expected to go higher over the next two to three years, normally a sign that the BoE thinks rate rises will be needed.
–Reuters contributed to this report
Forex – Dollar Steady as Trade Developments Eyed; Sterling Edges Up Before BoE
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