September 6, 2018 / 8:31 AM / 7 months ago

FOREX-Dollar steady on U.S. tariff fears, Brexit hopes boost pound

* Dollar bolstered by trade war worries

* Dollar gains curbed as pound buoyed by Brexit hopes

* Wobbly emerging currencies support safe-haven dollar

* Swedish crown slumps after central bank meeting

* Graphic: World FX rates in 2018

By Tom Finn

LONDON, Sept 6 (Reuters) - The dollar held steady on Thursday amid growing concerns that U.S. President Donald Trump would impose further tariffs on Chinese imports, though a bounce in European currencies impeded a broader rally by the greenback.

Trump could impose levies on $200 billion more of Chinese imports on Thursday when a public comment period on the new tariffs ends.

That would likely lend support to the dollar, which has become a principal haven for investors seeking shelter from a conflict over trade between the United States and China.

The greenback’s gains on Thursday, however, were muted and at 0800 GMT it traded broadly flat at 95.110.

Traders said that was because of gains made by sterling and the euro after Bloomberg reported on Wednesday that Germany would accept a less detailed agreement on Britain’s future ties with the EU to get a Brexit deal done.

The pound surrendered some of its gains after Germany said its position on Brexit had not changed and on Thursday sterling traded up 0.1 percent at $1.2923.

“The dollar continues to face residual pressure from the buoyant pound amid the latest speculation over Brexit. How long this lift could last remains to be seen, but it is prompting buy backs of other European currencies like the euro and Swiss franc for now,” said Takuya Kanda, general manager at Research.


Elsewhere, the Swedish crown sank 0.7 percent versus the euro after the Swedish central bank kept rates unchanged.

The Swedish currency fell last week to a nine-year low against the euro on concern about an approaching election and growing investor conviction that interest rates may not rise until well into 2019.

The crown has weakened more than any other developed-world currency this year, falling 12 percent against the dollar. The Swedish central bank is expected to be among the last to end stimulus policies dating from the 2008 financial crisis.

“The krona may struggle to rally much even with the Riksbank continuing to indicate a rate hike is coming later this year,” said Kit Juckes, global head of FX strategy at Societe Generale.

“There are buyers of the currency ahead of this weekend’s election on the grounds that the vote won’t change the underlying support of a near 4 percent current account surplus... but the global backdrop is definitely pulling the other way,” he added.

In contrast to the Riksbank and other European central banks, the United States Federal Reserve has been steadily raising borrowing costs since late 2015, lending support to the dollar.

The greenback’s more than 6 percent rise against its rivals over the past six months has hit emerging market currencies hard.

An index of emerging market currencies is trading at more than one-year lows amid fears those currencies would be hit by the global trade conflict as it negatively affects their export-oriented economies.

Argentina’s peso, which has lost more than 50 percent of its value this year, saw a rare pause in losses overnight.

Helping to restore some investor confidence, Argentine Economy Minister Nicolas Dujovne said on Tuesday he believed a deal to release early disbursements from a $50 billion standby loan agreement with the IMF could be put to its board by the end of the month.

The Argentine peso closed up more than 1 percent at 38.52 per dollar on Wednesday.

Elsewhere, the Australian dollar was 0.15 percent lower at $0.7185.

As with the previous day, when strong gross domestic product data did not provide much of a lift, Thursday’s economic indicators were unable to prop up the Aussie. (Additional reporting by Shinichi Saoshiro in Tokyo Editing by Gareth Jones)

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