U.S. Dollar Near Flat; Yuan Slips Despite PBOC Support
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Investing.com - The U.S. dollar was near flat on Friday in Asia, while the Chinese yuan slipped.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies was little changed at 96.500 by 1:30 AM ET (05:30 GMT).
While not a directional driver today, fund managers and strategists said things may get worse for the dollar.
“We expect to see better growth in the rest of the world ex-USA,” said Jack McIntyre, a portfolio manager at Brandywine Global Investment Management in Philadelphia. “The primary driver of dollar weakness will be a shift in relative economic growth rates between the U.S. and the rest of the world.”
U.S. President Donald Trump said earlier this week that Beijing and Washington will officially sign the phase one trade deal later this month.
The announcement removed much of the lingering uncertainty about the so-called ‘phase-1’ deal and also reinforced hopes that Trump’s need for re-election will keep an economically damaging trade war with China relatively contained over the coming months.
“You had safe-haven support for the dollar in 2019, but we have a trade truce now,” said Georgette Boele, senior foreign-exchange strategist at ABN Amro Bank in Amsterdam. “The dollar is on a path of long-term weakness.”
The AUD/USD pair fell 0.5% to 0.6959.
The USD/CNY pair gained 0.1%. The yuan traded slightly higher earlier in the day following news that China’s central bank again loosened its monetary stance and cut its reserve requirement ratio to lift its economy.
The GBP/USD pair fell 0.3% to 1.3107 amid concern that the U.K. won’t be able to reach a free-trade agreement with the European Union by the deadline at the end of this year.
Meanwhile, the EUR/USD pair slipped 0.1% to 1.1165 as data showed the region’s manufacturing downturn deepened in December.
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