FX Market: Dollar Steady After Trade Deal

close up of US dollar; fx market concept – WibestBroker

The dollar did not move much in the fx market early on Thursday. Traders were calm after the signing of the US-China phase one trade deal.

The euro was at $1.1155 against the dollar, or 0.1% higher. Over in the United Kingdom, the pound was at $1.3046, or 0.1% higher.

Against the yen, the dollar fetched 110.05, also 0.1% higher. The Australian dollar and the New Zealand dollar traded against the buck 0.1% and 0.3% higher, respectively. In China, the Chinese yuan headed toward its six-month high, gaining 0.1% at 6.8860 per dollar. Meanwhile, the Swiss franc rallied to a 15-month high of 0.9680 per dollar.

The US dollar index lost 0.1% at 96.910.

The signing of the phase-one trade deal could draw a line on the 18-month tit-for-tat tariff dispute between Washington and Beijing.

Also, it could mean the 2020 market will be calmer than before.

FX Market Traders Disappointed at Retained Tariffs  

But even though the market remained calm, analysts indicated traders were disappointed with the results of the deal.

The US reduced some tariffs on Chinese goods, but it still left a much more significant portion of it the same. According to reports, the taxes will remain until after a phase two deal is complete.

According to US Vice President Mike Pence, the parties already started phase two discussions.

Analysts believe phase two will tackle more contentious talking points.

Central Banks in Focus

Elsewhere, central banks are also coming into focus.

The South African central will be holding its latest monetary policy meeting later in the day. Markets are expecting it to hold on to its key repo rate at 6.5%.

Over in Turkey, the central bank will also be meeting to discuss interest rates. Last year, the bank slashed borrowing rates in half. The fx market and many economists are expecting another rate cut.

In the UK, the British pound might continue trading under pressure as the Bank of England becomes more dovish. Sterling traders are expecting the BOE to impose a rate cut amid the weakening signals of economic growth.

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