The greenback strengthened on Friday, as investors nervously awaited the result of Trump-Xi talks. The meeting between the leaders of the world’s two biggest economies this weekend may determine further escalation of trade tensions.
U.S. President and China’s President are to meet at a G20 summit in Buenos Aires which kicks off on Friday.
Trump has said he plans to significantly increase the current 10 percent tariffs on Chinese imports by January next year. This would drive to a further escalation of the trade war between the economic giants.
Markets could well be in for a volatile December if Trump and Xi fail to de-escalate their trade war. Trump himself had sent mixed signals.
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Forex – Commodities – Trump-Xi talks keep investors on tenterhooks
Trump-Xi talks may determine the direction of the dollar, which has gained more than 5% against its rivals this year. Concerns that rising trade tensions will hurt world economic growth boost the US currency’s safe-haven appeal.
The expected meeting could also impact currencies such as the trade-sensitive Australian dollar and New Zealand.
Forex traders appeared to favour holding the U.S. currency. The dollar index was 0.2% firmer at 96.99 — off almost one-week lows of 96.626 hit on Thursday.
The single currency was down 0.3% at $1.13626 while the dollar was a touch firmer at 113.53 yen.
The Australian dollar slipped 0.3%to $0.7299, down from three-month highs hit against a broadly-softer greenback on Thursday.
Sterling was almost 0.4% weaker at $1.2752.
Further, in commodities there was focus on whether OPEC and Russia can agree on oil production cuts next week.
Crude was starting to slip again having tried to steady on news that Russia is increasingly convinced it needs to reduce oil output along with the Organization of the Petroleum Exporting Countries (OPEC).
OPEC and its allies are meeting in Vienna on Dec. 6-7. Brent and U.S. crude were both down around 0.6% at $59.51 per barrel and $51.38 a barrel respectively
Spot gold barely budged at $1,223 per ounce.
Sources: Reuters, CNN money, Bloomberg
PLEASE NOTE The information above is not investment advice.