Sun, Nov 03, 2019 - Page 14 News List

US dollar drops on mixed data, trade dispute optimism

Reuters

The US dollar dropped on Friday after data showed a mixed view on the economy, and as optimism that the US and China will reach a deal to end their trade dispute reduced safe-haven demand for the greenback.

The US dollar initially gained after US jobs growth slowed less than expected last month, while wages gained and hiring in the prior two months was stronger than previously estimated.

“The data is much better than expected. Markets were braced, certainly in headline terms, for some much weaker numbers given the expected impact from the GM [General Motors Co] strike and the census hiring. So very good data in that context,” said Shaun Osborne, chief foreign-exchange strategist at Scotiabank in Toronto.

Striking workers who do not receive a paycheck during the payrolls survey period are treated as unemployed. The strike by about 46,000 workers at GM plants in Michigan and Kentucky ended on Friday last week. Temporary census workers also left their jobs during the month.

However, the US currency was unable to hold onto the gains and was further dented after the Institute for Supply Management said the manufacturing sector contracted for the third consecutive month last month.

The US dollar index against a basket of six major currencies fell to 97.12, down 0.24 percent on the day. It earlier rose to 97.45 on the jobs data. The index is down 0.7 percent for the week.

The pound on Friday edged 0.1 percent higher at US$1.2946 thanks to a broad weakness in the greenback and gained 0.9 percent for the week.

In Taipei, the New Taiwan dollar fell against the US dollar, losing NT$0.017 to close at NT$30.479, up 0.4 percent from last week’s US$30.594.

The US dollar has weakened since the US Federal Reserve on Wednesday cut interest rates for the third time this year, and indicated that further reductions might not be forthcoming.

However, concerns about a slowing US economy is weighing on the greenback, with the US central bank expected to resume rate cuts if the economic data worsen.

“There is a bit more vulnerability starting to feed into the dollar, with perhaps the US economy slowing down,” Osborne said.

Fed Vice Chair Richard Clarida on Friday said that the rate cuts put into effect leave the US economy better armed to withstand the risks of a global slowdown.

Safe-haven flows into the US currency have also weakened on optimism that the US and China are close to reaching a deal to end their trade dispute, which has been blamed for slowing global growth.

US Trade Representative Robert Lighthizer and US Secretary of the Treasury Steven Mnuchin made progress on a variety of issues during a telephone call on Friday with Chinese Vice Premier Liu He (劉鶴) about an interim trade agreement, USTR said in a statement on Friday.

Additional reporting by staff writer, with CNA

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