Sun, Oct 13, 2019 - Page 15 News List

US dollar slides to low on Brexit, US-China hopes

TURNING POINT?The pound initially fell, but took off when the EU gave Michel Barnier the go-ahead to have more intense talks with Britain

AFP and Reuters, London and NEW YORK

The US dollar on Friday fell to a three-week low, as safe-haven buying eased and risk sentiment improved on hopes of progress in trade negotiations between the US and China, as well as increased chances of an orderly British exit from the EU.

Sterling rose to a more than three-month high versus the US dollar on optimism about Brexit, while the euro advanced to a three-weak peak as risk appetite rose.

At the same time, other safe-haven currencies such as the yen and Swiss franc slid on the day.

The pound had a rollercoaster day, at first falling after EU Council President Donald Tusk said that Britain had not come up with a workable Brexit deal, seemingly pouring cold water on the previous day’s optimism sparked by a joint British-Irish statement about a “pathway” forward.

Then the currency took off when EU member states gave Brexit negotiator Michel Barnier the go-ahead for more intense talks with Britain over the weekend, just days before a key European summit.

David Cheetham at XTB said the latest developments might “well be a pivotal turning point in negotiations,” but more “clarity” was needed.

Forex.com analyst Fawad Razaqzada also seemed to question the wisdom of buying into the British currency with such abandon despite lacking all the facts.

“Traders are evidently happy to be buying the rumors and will be asking questions later,” he said.

The rally inflicted heavy losses on investors having bet on a further fall in the pound, as they were caught in a “short squeeze,” analysts said.

Sterling jumped 2.55 percent versus the US dollar this week, its largest weekly gain in more than two years and ended the session at US$1.2647, up 1.66 prcent.

The dollar index fell 0.37 percent, with the euro up 0.33 percent to US$1.104.

The Japanese yen weakened 0.40 percent versus the greenback at 108.43 per dollar, as its global safe-haven luster faded.

Meanwhile, in Taipei on Wednesday the New Taiwan dollar dropped against the US dollar, losing NT$0.008 to close at NT$30.850, but was up 0.4 percent from NT$30.973 on Saturday last week.

Markets in Taiwan were closed on Thursday and Friday for the extended four-day Double Ten National Day long weekend.

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