The US dollar on Friday rose against a basket of currencies for its first weekly increase in three, prompted by hopes of progress in US-China trade talks and that the US Federal Reserve would not lower rates aggressively.
Sterling retreated from a two-month high versus the greenback after Irish Minister for Foreign Affairs and Trade Simon Coveney said that London and the EU were not yet close to a Brexit deal.
US and Chinese deputy trade negotiators are set to continue talks that began on Thursday in an effort to lay the groundwork for high-level discussions early next month that would determine whether the world’s biggest economies can reach a trade deal.
While tariffs and worries about protracted supply chain disruption have hampered global business activity, the US economy is still faring relatively well, analysts said.
“The US economy is clearly doing better than anyone else,” FX Street senior analyst Joseph Trevisani said in New York. “I’m still in the stronger dollar camp.”
With housing starts at a 12-year high and factory output rebounding last month, the longest US expansion on record seems to have more legs, he said.
In late US trading, an index that tracks the US dollar against a basket of six major currencies was up 0.24 percent at 98.51 for a weekly gain of about 0.25 percent.
The euro fell 0.2 percent on the day to US$1.10175, while the greenback slipped 0.37 percent to ￥107.645.
Against a favorable economic backdrop, the Fed on Wednesday lowered key lending rates by a quarter point, but signaled a higher bar to further reductions in borrowing costs.
On Friday, Fed officials delivered different assessments on the economy and what should be done about it.
Interest rates futures implied traders saw a 63 percent chance of another rate cut by the end of this year, compared with 69 percent late on Thursday, CME Group’s FedWatch program showed.
Meanwhile, sterling was briefly the biggest gainer overnight against the US dollar after European Commission President Jean-Claude Juncker late on Thursday said that he thought Brussels could reach an agreement with Britain on its departure from the EU.
Sterling’s gains faded after the comments by Coveney on a Brexit deal and a Financial Times report that British Prime Minister Boris Johnson had told colleagues that he did not expect to be able to reach a full “legally operable” deal covering the Irish border at a meeting of EU leaders.
The pound was down 0.37 percent at US$1.2476 after touching a two-month high at US$1.2582.
It reached a four-month high of ￡0.87875 per euro before easing to ￡0.8826, down 0.15 percent on the day.
In Taipei, the New Taiwan dollar on Friday gained NT$0.026 against the US dollar to close at NT$30.980, gaining 0.2 percent from a close of NT$31.055 on Sept. 12.
Turnover totaled US$1.07 billion. The greenback opened at NT$31.030, moving between NT$30.905 and NT$31.040 before the close.
Additional reporting by staff writer
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