FILE PHOTO: An employee counts U.S. dollar bills at a money exchange office in central Cairo, Egypt, March 20, 2019. REUTERS/Mohamed Abd El Ghany/File Photo
May 7, 2019
By Daniel Leussink
TOKYO (Reuters) – The dollar hung near a five-week low against the yen on Tuesday after worries about U.S.-China trade tensions rekindled fears about the outlook for global growth.
The greenback was relatively unchanged against most major peers, even as comments from the White House that China had moved away from trade-related commitments pushed down U.S. bond yields and stock futures.
The dollar index against a basket of six rivals was basically unchanged at 97.53, having ended the previous session nearly flat.
“From China’s perspective, a break up in negotiations isn’t really favorable for the domestic economy. I think they want to get a deal one way or the other,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
While there had been talk that Washington and Beijing might reach a trade deal this week, it is likely the negotiations will take a bit more time, he added.
Against the yen, the dollar was a shade lower at 110.685 yen. It had brushed a five-week low of 110.285 yen per dollar during the previous session.
The Japanese currency tends to benefit during geopolitical or financial stress as Japan is the world’s biggest creditor nation.
Late on Monday, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said China had moved away from commitments made over the course of trade negotiations.
Lighthizer said his office would probably put out a notice on Tuesday about a proposed increase in tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent.
Futures for the S&P 500 fell following the remarks. U.S. 10-year Treasury bond yields hit their lowest since May 1.
The dollar moved largely in familiar trading ranges against other units.
The euro held steady at $1.1199.
The Australian dollar was up 0.1 percent at $0.6993, though it still hovered near a four-month low touched during the previous session.
Investors eyed Australian retail sales data for March due at 0130 GMT for trading cues, while also keeping tabs on a rate decision by Australia’s central bank later in the day.
A slim majority of economists polled by Reuters expected the Reserve Bank of Australia to keep rates at a record low 1.50 percent, though calls for an easing have grown louder after disappointingly weak first-quarter inflation.
Sterling was a tad higher at $1.3107, recovering slightly after giving up more than half a percent overnight.
(Graphic: World FX rates in 2019 – http://tmsnrt.rs/2egbfVh)
(Editing by Sam Holmes)