The dollar found broad support on Monday as global political uncertainty and fears over a widening of the Sino-U.S trade war kept investors in safe harbours ahead of a slew of global economic indicators this week. The greenback was steady against most major currencies. It held firm on the Japanese yen at 108.93 per dollar and sterling at $1.2287, while easing very slightly against the euro to $1.0932.
It gained against riskier, trade-exposed currencies such as the Australian dollar and the Chinese yuan. The biggest loser was the New Zealand dollar, which fell half a percentage point as business confidence hit its weakest in more than 11 years.
"Risk-off sentiment is prevailing in the market," said Anthony Doyle, global cross-asset specialist at fund manager Fidelity International in Sydney, citing US political turmoil and Brexit as looming worries, besides the trade war. "There's a lot of uncertainty out there," he said.
In Asian hours, traders mostly shrugged off news that the Trump administration was considering de-listing Chinese companies from US stock markets after the reports were hosed down by Treasury officials. Elsewhere, factory activity surveys in China suggested there were some signs of improvement this month, though analysts believe the gains cannot be sustained and forecast further economic weakness.
In Australia, forecasts for a rate cut on Tuesday firmed with gathering economic gloom. Markets are pricing a better than 75% chance the Reserve Bank of Australia will reduce its cash rate for a third time this year.
German inflation, British economic growth and US manufacturing indicators are all due later on Monday, with US employment figures at the end of the week. Anything short of expectations poses a risk to fragile sentiment. Against a basket of currencies the dollar edged higher to 99.165.
The New Zealand dollar dropped as far as $0.6257, very close to a four-year low, as a survey showed sour business sentiment and made a case for a rate cut. The Australian dollar also drifted lower to $0.6756 on expectations of monetary easing. Traders are expecting a lull in trade-war headlines as China takes a week-long holiday from Tuesday, which marks the 70th anniversary of the People's Republic of China. China's yuan held steady at 7.1219 per dollar. With markets largely baking in another rate cut, further moves in the Aussie will likely be driven by the RBA's tone and outlook, said Chris Weston, head of research at brokerage Pepperstone Group in Melbourne.
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