July 1, 2019 / 2:21 PM / 2 months ago

FOREX-Dollar advances to 2-week high after U.S.-China trade tensions ease

    * Trump, Xi agree to restart trade talks over the weekend
    * Risk assets rally, safe-haven yen, franc fall
    * Offshore yuan nears 2-month high, data tempers gains
    * U.S. manufacturing index comes in slightly higher than
expected
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Updates prices, adds comment, U.S. data, FX table, changes
byline; dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, July 1 (Reuters) - The dollar rose to two-week
highs on Monday after the United States and China agreed to
restart their troubled trade talks, with investors selling
safe-haven currencies such as the Japanese yen and Swiss franc
as tensions eased between the world's two largest economies.
    While reports of an agreement had been flagged ahead of U.S.
President Donald Trump and Chinese counterparty Xi Jinping's
meeting on the sidelines of the G20 meeting, the outcome was
more positive than investors had expected. 
    Trump said he would hold back on new tariffs and that China
will buy more farm products, and he offered to ease restrictions
on tech company Huawei.
    "The concessions from both sides are hardly anything for
both sides to brag about; this meeting basically just brings us
back to where we were in talks in late April," said Edward Moya,
senior market analyst at OANDA in New York.
    "While no set timeline has been suggested by both sides,
financial markets are appearing to be optimistic we could see
something by autumn," he added.
    Global stocks jumped and investors dumped safe-haven assets.
    China's offshore yuan also rose more than 0.5% to as high as
6.8165 yuan per dollar, near a two-month high, before easing
back to 6.8476 after disappointing factory activity data.

    The dollar also gained after data showed the U.S.
manufacturing activity index, as measured  by the Institute for
Supply Management, came in slightly higher than expected in June
to 51.7.
    The details of the report, however, were not so stellar,
with the price paid index, an inflation indicator, hitting its
slowest since February 2016.
    The dollar, which has fallen in recent weeks on rising
expectations for Federal Reserve interest rate cuts, rose 0.3%
against a basket of currencies, to 96.452, with the index
hitting 96.611, a roughly two-week peak. 
    The euro, meanwhile, fell 0.3% to $1.1339.
    The yen, which investors tend to buy when they are looking
for safety, fell, pushing the dollar up 0.3% on the day at
108.24 yen. Earlier, the dollar hit a two-week high of
108.53 yen.
    The dollar also rose versus the Swiss franc, up 0.8
pct to 0.9839 franc.
    This week sees the release of crucial U.S. economic data
including nonfarm payrolls on Friday and non-manufacturing
activity on Wednesday, which should help investors better assess
whether the Fed will cut interest rates later this month.
    "Economic data will clearly have a more important role this
week, and we can't help but think that Friday's U.S. employment
overview will be a defining moment for July Fed rate
expectations," said BMO Capital Markets FX strategist Stephen
Gallo.
    
    ========================================================
    Currency bid prices at 10:06 AM (1406 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1328        $1.1368     -0.35%         -1.23%      +1.1374     +1.1316
 Dollar/Yen       JPY=        108.3400       107.8800    +0.43%         -1.74%      +108.5300   +108.1100
 Euro/Yen         EURJPY=     122.76         122.65      +0.09%         -2.74%      +123.3500   +122.5700
 Dollar/Swiss     CHF=        0.9846         0.9760      +0.88%         +0.33%      +0.9849     +0.9783
 Sterling/Dollar  GBP=        1.2643         1.2693      -0.39%         -0.89%      +1.2707     +1.2635
 Dollar/Canadian  CAD=        1.3109         1.3090      +0.15%         -3.88%      +1.3112     +1.3064
 Australian/Doll  AUD=        0.6984         0.7020      -0.51%         -0.92%      +0.7036     +0.6983
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1155         1.1097      +0.52%         -0.88%      +1.1160     +1.1120
 Euro/Sterling    EURGBP=     0.8961         0.8953      +0.09%         -0.26%      +0.8979     +0.8926
 NZ               NZD=        0.6690         0.6717      -0.40%         -0.40%      +0.6731     +0.6688
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.5481         8.5313      +0.20%         -1.05%      +8.5552     +8.5106
 Euro/Norway      EURNOK=     9.6850         9.7025      -0.18%         -2.23%      +9.7018     +9.6647
 Dollar/Sweden    SEK=        9.3219         9.2815      +0.06%         +4.00%      +9.3280     +9.2783
 Euro/Sweden      EURSEK=     10.5620        10.5552     +0.06%         +2.90%      +10.5645    +10.5260
 
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Tommy Wilkes in London; editing by Jonathan Oatis)
  
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