The U.S. dollar is on track to break an 8-day win streak
The U.S. dollar slipped into negative territory early Tuesday, on pace to snap an eight-day winning streak as investors turned their attention to details in the U.S.-China trade spat.
“Now that the FX space has undergone multiple days of dollar strength, investors will be waiting for the headlines out of this week’s ministerial-level trade talks in Beijing,” said Stephen Gallo, European head of currency strategy at BMO.
“We think the broad dollar is close to being priced for neutrality on U.S./China trade issues. In simple terms, this means neither an escalation nor a rollback of tariffs, but a continued ‘pledge’ from both sides to rectify the more intractable issues in the bilateral relationship over the coming months and quarters,” Gallo said.
President Donald Trump set a deadline of March 1 to reach a trade agreement with Beijing.
In other news, a renewed partial shutdown of the government appears to have been avoided after lawmakers reached a tentative budget deal.
Trading in major pairs like the euro and British pound was calm on Tuesday, while the dollar gained against traditional safe haven currencies like the Japanese yen USDJPY, +0.10% and Swiss USDCHF, +0.3785% as risk assets were performing better. This was also reflected in a stronger Australian dollar AUDUSD, +0.3541% as well as strength versus the greenback across emerging markets.
The ICE U.S. Dollar Index DXY, -0.12% was 0.1% weaker at 96.932, but still holding close to its highest level since December, according to FactSet data. The popular gauge, which measures the buck against six rivals, had been in the green for eight days in a row until Tuesday. A record number in U.S. job openings in December at 7.34 million did little to nudge the index higher.
The euro EURUSD, +0.1685% the buck’s major rival, meanwhile was slightly stronger at $1.1294, compared with $1.1278 late Monday.
The British pound GBPUSD, +0.1711% was little changed in negative territory at $1.2877. U.K. Prime Minister Theresa May told lawmakers earlier that they must hold their nerve in the last strides of the Brexit negotiations, but also that more time and talks were needed to firm up a final agreement.
May has traveled to Brussels and Ireland recently to secure changes to the Brexit deal she agreed with the European Union late last year, but which was rejected by British Members of Parliament. The U.K. is set to leave the EU on March 29, leaving little time to complete an orderly exit from the trade bloc.
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