(New throughout, updates prices, market activity and comments)
By Kate Duguid
NEW YORK, Dec 16 (Reuters) - The foreign exchange market
held steady on Monday, with the U.S. dollar slightly lower, in
anticipation of further details on the U.S.-China trade
agreement.
The "phase one" trade deal between Washington and Beijing
has been "absolutely completed," National Economic Council
Director Larry Kudlow told Fox News Channel on Monday, adding
that U.S. exports to China will double under the agreement.
The deal, announced on Friday after more than two and a half
years of on-off negotiations between Washington and Beijing,
will reduce some U.S. tariffs on Chinese goods in exchange for
increased Chinese purchases of U.S. agricultural, manufactured
and energy products by some $200 billion over the next two
years.
But although China's trade delegation expressed optimism
about the deal, some government officials were cautious. The
deal "is a phased achievement, and does not mean that the trade
dispute is settled once and for all," said a Reuters source in
Beijing with knowledge of the situation. Caution over the future of trade talks pushed the dollar
index .DXY down 0.15%, last at 97.030. The trade-sensitive
Chinese yuan CNH= and Australian dollar AUD= were both off
last week's four-month peaks.
"FX investors took one look at the semi-conclusion of a
'phase one' deal on Dec. 12 and were overjoyed, but came back to
the table on Dec. 13 with the feeling of having more questions
than real answers," said Stephen Gallo, European head of foreign
exchange strategy at BMO Capital Markets.
The euro EUR= , which had spiked on Friday to a four-month
high of $1.1199 against the dollar, retraced most of those
gains, last at $1.1146, nevertheless up modestly over the course
of Monday's trade. The yen JPY= , a safe-haven asset which
benefits from market uncertainty, reached a two-week low on
Friday. It was fractionally stronger on Monday to last trade at
109.57 yen per dollar.
Monday's muted moves may be evidence of investor caution, of
"nobody really wanting to take too much of a large position
going into the end of the year given the lack of liquidity. So
you're seeing just some continuation as well as some position
squaring," said Charles Tomes, portfolio manager at Manulife
Asset Management
Elsewhere, sterling remained bolstered by expectations that
last week's resounding electoral win for British Prime Boris
Johnson's Conservative Party will end near-term Brexit
uncertainty. The pound was last trading at $1.335 GBP= , 0.19%
firmer on the day.
Currency market positioning https://tmsnrt.rs/38EYb41
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