Home Forex Dollar edges up against yen ahead of G20 summit

Dollar edges up against yen ahead of G20 summit

by Paul

The dollar hovered near a one-week high against the yen, buoyed by hopes of Sino-U.S. trade talk progress

The dollar hovered near a one-week high against the yen on Thursday, propped up by hopes of Sino-U.S. trade talk progress though investors were nonetheless cautious ahead of a meeting between leaders of the two powers in Japan in days ahead.

The greenback was little changed at 107.730 yen, having risen about 0.6% overnight to 107.850 yen, its highest since June 20. The U.S. currency was supported by comments from U.S. Treasury Secretary Steven Mnuchin that the trade deal between the United States and China is “about 90%” complete.

As the yen’s moves on the Mnuchin comments show, the market is likely to react nervously to headlines related to the G20 summit, said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.

U.S. President Donald Trump and Chinese President Xi Jinping are due to meet at the June 28-29 G20 summit in Osaka. Investors are focusing on whether the two leaders can pave the way to resolve a trade dispute between the world’s two biggest economies.

The potential implications of the Trump-Xi meeting for U.S. monetary policy are huge, Yamamoto at Mizuho Securities said.

If the two sides agree not to impose more tariffs, the Fed would no longer need to cut rates, he said. On the contrary, if the talks point to the imposition of more tariffs, that could nudge hesitant policymakers towards rate cuts.

The dollar has taken a hit over the past week – it reached a six-month low of 106.780 yen on Tuesday – after the Federal Reserve opened the door to possible monetary easing in the coming months.

The dollar index against a basket of six major currencies was a touch lower at 96.196 after rising modestly the previous day.

The index had retreated to a three-month low of 95.843 at the start of the week amid the Fed’s easing prospects. But it has managed to regain some traction after comments this week from central bank officials such as Chair Jerome Powell that tapered aggressive rate cut expectations.

The euro was steady at $1.1369 after inching up 0.05% on Wednesday.

The Canadian dollar was on a bullish footing as crude oil’s surge supported commodity-linked currencies.

The loonie traded at C$1.3124 per dollar after advancing overnight to C$1.3108, its strongest since early February.

Oil prices surged as U.S. stockpiles of crude and refined products decreased.

The New Zealand dollar traded near a two-month peak of $0.6693 scaled on Wednesday, when the currency bounced after the Reserve Bank of New Zealand refrained from lowering rates.

The Australian dollar was close to a 2-1/2-week high of $0.6995 brushed the previous day.

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