Dollar buoyed by trade deal hopes, strong US economic data

The dollar held the upper hand against its rivals on Wednesday, particularly versus traditional safe-haven currencies, on rising hopes for a U.S.-China trade deal and a string of solid U.S. economic data.

The dollar index against major currencies was little changed at 97.936 in early Asian trade after rising 0.37 percent the previous day.

Against the yen, the dollar traded at 109.08 yen, down slightly on the day but still not far from its October high of 109.285.

The Swiss franc changed hands at 0.9925 to the dollar following its 0.5% fall the previous day, while tumbled 1.73 percent on Tuesday and last stood at $1,485.8 per ounce, near the lower end of its trading range over the past month.

The euro stood at $1.1073, having dropped 0.49% on Tuesday and was not far from a near three-week low of $1.10635 hit in U.S. trade on Tuesday.

Hopes that the Trump administration could roll back some of the tariffs it imposed on goods from China as part of a “phase one” U.S.-China trade deal boosted risk sentiment in financial markets.

A survey on the vast U.S. service sector published on Tuesday showed that business sentiment had improved in October from a three-year low in September.

The ISM non-manufacturing sector index rose to 54.7 from 52.6 in September, beating market expectations.

The rebound is a welcome sign for dollar bulls as a fall in the index would have suggested that malaise in trade war-hit manufacturers was infecting the service sector, too.

The data came after a strong U.S. employment report on Friday.

“On top of Sino-U.S. trade issues, the market is reacting to signs of U.S. economic strength at the moment,” said Kyosuke Suzuki, director of foreign exchange at Societe Generale.

The positive mood spilled over to the risk-sensitive Australian dollar, which changed hands at $0.6894. It was little changed on the day but has maintained gains of 3.4 percent since hitting a 10-1/2-year low on October 2.

The yuan continued to rally on rising optimism for a trade truce between Washington and Beijing.

The offshore yuan ticked up 0.1 percent to 6.9948 per dollar after having risen to a three-month high of 6.9867 to the dollar on Tuesday.

The currency has gained 2.9 percent from its record low in the offshore trade marked in early September.

Source: Reuters