(New throughout)
By Kate Duguid
NEW YORK, Nov 13 (Reuters) - The U.S. dollar fell against
the Japanese yen and the Swiss franc, traditional safe-haven
investments, after media reports that trade talks between the
U.S. and China had "hit a snag" over farm purchases.
The negotiations stalled as China expressed it did not want
a deal that looked one-sided in the favor of the United States,
the Wall Street Journal reported on Wednesday, citing people
familiar with the matter.
Investors pulled out of riskier assets, sending the three
major U.S. stock indexes lower, and pushing up safe-haven assets
like the Japanese yen JPY= and Swiss franc CHF= . Both
currencies were at their highest in about a week against the
dollar, with the yen up 0.21% at 108.76 and the franc up 0.38%
to 0.989.
"The main thing we seem to be doing in FX today is following
a bit of a risk-off tendency," said Daniel Katzive, head of
foreign exchange strategy for North America at BNP Paribas. "The
thinking there is that the market had gotten priced for a pretty
constructive outlook of reduced recession risk, reduced trade
risk and (is) now paring back some of that optimism."
Against the euro, the franc rallied to a one-month high
EURCHF= as risk appetite decreased and as hedge funds unwound
some of their bets against the currency.
The report Wednesday comes after a speech from U.S.
President Donald Trump on Tuesday in which he threatened to
raise tariffs on China and criticized European Union trade
policies before a Nov. 14 deadline to decide whether to raise
tariffs on European and Japanese carmakers.
Hedge funds had ramped up short bets against the franc in
the last two weeks on expectations a trade pact between
Washington and Beijing would fuel demand for risky assets and
boost carry-trades where investors borrow in cheap currencies
and invest in riskier ones.
The fall in the dollar against safe-haven assets came after
the U.S. currency had held steady against the euro EUR= and a
basket of six rival currencies .DXY earlier in the day on
stronger-than-expected consumer prices in October and an
optimistic outlook for the economy from Federal Reserve Chair
Jerome Powell.
Both the inflation data and Powell's remarks solidified the
case for the central bank to pause its monetary easing cycle.
Expectations for an interest rate cut do not rise above 30%
before July 2020, according to CME Group's FedWatch tool. And
the slim chances of a cut in the months prior became slimmer on
Wednesday.