Early trade in New York: trade talk hopes poise dollar for first positive week this year

The dollar held firm against its rivals on Friday and was poised for its first weekly gain in five weeks, boosted by optimism about trade talks between China and the United States. US Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs on Chinese goods and suggested offering a tariff rollback during trade discussions scheduled for January 30, the Wall Street Journal reported on Thursday, citing people familiar with the internal deliberations.
Although a Treasury spokesman denied the report, the positive sentiment was enough to lift the dollar index and the three major US stock indexes Friday morning. "Yesterday's WSJ headline concerning a possible rollback of the Trump tariffs was a setback for (the US dollar/renminbi cross), and although it was subsequently denied, it had created confusion in the foreign exchange space," said Stephen Gallo, European head of foreign exchange strategy at BMO Capital Markets in London.
Chinese Vice Premier Liu He will visit the United States on January 30 and 31 for talks aimed at resolving the trade standoff between the world's two largest economies. Stronger-than-expected US industrial production numbers also helped lift the greenback. American manufacturing output increased by the most in 10 months in December, pushed up by a surge in the production of motor vehicles and a range of other goods, the Federal Reserve said on Friday.
Against a basket of rivals, the dollar was set to rise 0.6 percent on the week, its first positive week since mid-December. Against the euro, the dollar had strengthened 0.25 percent to $1.137, its strongest since January 4. The pound slipped against the euro, partially trimming overnight gains, as traders wagered on a second referendum vote on Britain's EU membership.