Dollar drifts down as trade-deal progress

Dollar drifts down as trade-deal progress

SINGAPORE: The dollar drifted lower on Tuesday as investor appetite for higher risk currencies found support on a report of German stimulus plans, diminishing chances of a no-deal Brexit and hopes of a breakthrough in the Sino-U.S. trade war.

The mood lifted the Australian dollar to a six-week high of $0.6875 and the pound also hit a six-week high of $1.2385 as a British law blocking a no-deal exit from the European Union came into force.

The safe-haven yen touched a five-week low of 107.46 per dollar as risk appetite rose. Moves were modest in early Asian trade, however, with traders broadly remaining on the sidelines ahead of a key European Central Bank meeting on Thursday, at which policymakers are expected to ease monetary policy.

Investors also await Chinese inflation data due around 0130 GMT, which is expected to show another year-on-year decline in factory prices, adding to arguments for more central bank stimulus.

Ratings house Fitch on Tuesday cut growth forecasts for Europe and China citing rising protectionism.

Market hopes for a breakthrough rested on confidence overnight from U.S. Treasury Secretary Steven Mnuchin, who told Fox television that there had been “a lot of progress” on a U.S-China trade deal and that the U.S. side was “prepared to negotiate”.

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