October 11, 2019 / 2:47 PM / 2 months ago

FOREX-Dollar slides to 3-month low on hopes of Brexit, U.S.-China trade deals

    * Euro up vs dollar as risk appetite returns
    * Sterling rises to 3-month high vs dollar
    * Safe-haven yen drops to 2-1/2-month low vs dollar
    * EU, Britain to hold intense negotiations on Brexit deal 
    * China drums up hope for a partial trade deal 
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Recasts, updates prices, adds FX table, new comment, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 11 (Reuters) - The dollar fell to a three-week low on Friday as safe-haven buying eased
and risk sentiment improved on hopes of progress in trade negotiations between the United States and
China, as well as increased chances of an orderly British exit from the European Union.
    Sterling rose to a more than three-month high versus the dollar on optimism about Brexit, while the
euro advanced to a three-weak peak as risk appetite rose.
    At the same time, other safe-haven currencies such as the yen and Swiss franc slid on the day. 
    "We have heard positive rhetoric emanating from the trade talks with China," said Bipan Rai, North
American head of FX strategy at CIBC Capital Markets in Toronto.
    "We have also gotten positive undertones from Brexit negotiations. You have seen some of the short
sterling positions close up because the odds of a deal have increased and if that's the case investors may
be a little more comfortable taking dollar risk off the table," he added.
    Top U.S. and Chinese negotiators wrapped up their first day of trade talks on Thursday, with U.S.
President Donald Trump welcoming what he called a "very, very good negotiation with China". 
    Trump and China's top trade negotiator, Vice Premier Liu He, are scheduled to meet later on Friday.
    A Chinese newspaper said on Friday a "partial" trade deal would benefit China and the United States,
reflecting Beijing's aim of cooling the row before more U.S. tariffs kick in.
    On Brexit, the 27 countries staying in the EU after Britain leaves gave the go-ahead on Friday for
their chief negotiator to hold another round of intense and secret negotiations with London in a bid to
secure a deal, two senior diplomatic sources said.
    Michel Barnier and his British counterpart Stephen Barclay had earlier held what both sides called a
"constructive" meeting in Brussels as Britain's scheduled departure date of Oct. 31 grew closer. Their
meeting followed a burst of optimism after the British and Irish prime ministers said on Thursday they had
found "a pathway" to a possible deal.
    Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto, said sterling risk reversals,
an indicator of currency sentiment in the options market, are exploding higher into positive territory,
with calls now trading at a big premium to puts. The move, he said, suggested that option traders are
betting sterling has turned the corner against the dollar.
    In mid-morning trading, the dollar index was down 0.4% at 98.307, after earlier declining to a
3-1/2-month low of 98.197.
    The euro, meanwhile, rose 0.4% to $1.1052 , mirroring the three-week high reached on Thursday.
    The safe-haven yen weakened against the dollar, which gained 0.5% to 108.53 yen. The dollar
earlier touched a 2-1/2-month high against the yen.
    Sterling surged to a more than three-month high of $1.2708 and a five-month peak of 87.02
pence against the euro. The pound was last up 1.7% at $1.2658.
    
    ========================================================
    Currency bid prices at 10:32AM (1432 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1043        $1.1004     +0.35%         -3.71%      +1.1062     +1.1002
 Dollar/Yen       JPY=        108.5100       107.9600    +0.51%         -1.59%      +108.5600   +107.8600
 Euro/Yen         EURJPY=     119.86         118.80      +0.89%         -5.04%      +119.9900   +118.7400
 Dollar/Swiss     CHF=        0.9981         0.9969      +0.12%         +1.70%      +0.9990     +0.9959
 Sterling/Dollar  GBP=        1.2654         1.2440      +1.72%         -0.81%      +1.2705     +1.2409
 Dollar/Canadian  CAD=        1.3206         1.3290      -0.63%         -3.16%      +1.3300     +1.3186
 Australian/Doll  AUD=        0.6794         0.6761      +0.49%         -3.62%      +0.6805     +0.6754
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1025         1.0970      +0.50%         -2.03%      +1.1039     +1.0966
 Euro/Sterling    EURGBP=     0.8725         0.8845      -1.36%         -2.88%      +0.8868     +0.8703
 NZ               NZD=        0.6334         0.6318      +0.25%         -5.70%      +0.6348     +0.6317
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.0777         9.1238      -0.51%         +5.08%      +9.1290     +9.0705
 Euro/Norway      EURNOK=     10.0254        10.0430     -0.18%         +1.21%      +10.0510    +10.0207
 Dollar/Sweden    SEK=        9.8108         9.8403      +0.05%         +9.45%      +9.8465     +9.7932
 Euro/Sweden      EURSEK=     10.8355        10.8301     +0.05%         +5.57%      +10.8546    +10.8090
 
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Olga Cotaga in London; Editing by Kirsten
Donovan)
  
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