FOREX-Dollar finds support as trade talks stay on track, euro nurses losses

Published 24/09/2019, 01:48
FOREX-Dollar finds support as trade talks stay on track, euro nurses losses
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* Euro nurses losses after weak manufacturing data

* Dollar finds broad support in Asia session, rises vs yen

* RBA, BOJ speeches eyed

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook

SINGAPORE, Sept 24 (Reuters) - The euro nursed losses on

Tuesday after weak readings on German manufacturing rattled

confidence, while the dollar found broad support as investors

looked for signs of progress from Sino-U.S. trade negotiations.

The single currency EUR= shed 0.2% overnight after a

survey showed European business activity stalling, and in fact

going backwards in powerhouse Germany where a manufacturing

recession deepened. It held around $1.0990 in Asian hours, while the dollar

edged higher against the Japanese yen JPY= to buy 107.58 yen

and held its ground on the Australian and New Zealand dollars.

Against a basket of currencies .DXY , the dollar edged

higher to 98.621.

"The U.S. dollar is rising by default rather than anything

U.S.-specific," said Michael McCarthy, chief market strategist

at CMC Markets in Sydney, adding that volumes were low as

traders mostly kept to the sidelines waiting for news.

"Trade is never far from the markets' radar, but I think

currency markets are increasingly expecting (U.S-China tensions)

to be protracted, I think optimism has dissipated."

The British pound wallowed at $1.2431, near a one-week low,

ahead of a UK Supreme Court ruling due around 0930 GMT.

The court will rule on whether Prime Minister Boris Johnson

acted unlawfully when he suspended parliament just weeks before

Brexit, with the case's outcome potentially complicating his

plans to lead his country out of the European Union next month.

The Australian and New Zealand dollars were steady ahead of

a speech by Reserve Bank of Australia Governor Phil Lowe at 1005

GMT, with the market expecting a dovish tone after weak jobs

data last week lifted expectations of an imminent rate cut.

Both currencies sat near three-week lows, with the Aussie

AUD=D3 buying $0.6772 and the kiwi NZD=D3 $0.6290.

"We think Lowe will provide a strong signal that the RBA is

ready to cut rates again, endorsing our view for a 25bp cut in

October," said Tapas Strickland, a director of economics and

markets at National Australia Bank in Sydney.

"Any comments on the scope for unconventional policy will

also be critical for the market."

The Bank of Japan's governor Haruhiko Kuroda is also due to

speak today, around 0530 GMT.

Meanwhile a delicate upbeat mood broadly held, with Chinese

importers' decision to buy 10 boatloads of U.S. soybeans seen as

a positive sign leading in to trade negotiations next month.

China's yuan CNH= strengthened very slightly to 7.1056 in

offshore trade.

U.S. Treasury Secretary Steven Mnuchin told Fox Business

that discussions were scheduled in two weeks and that he and

U.S. Trade Representative Robert Lighthizer would meet Chinese

Vice Premier Liu He.

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