Dollar rises against safe-haven currencies buoyed by US-UK trade deal
The U.S. dollar gained against the safe-haven yen and Swiss franc on Thursday with market nerves soothed by a bilateral trade deal between the United States and the United Kingdom, while sterling reversed gains made after an interest rate cut from the Bank of England.
U.S. President Donald Trumpannounced a "breakthrough" trade agreement with Britain on Thursday, which leaves in place a baseline 10% tariff on British imports including vehicles.
The market sees the trade deal as positive because it means Trump is envisioning a 10% baseline for friendly countries with anything beyond that subject to negotiation, said Axel Merk, president and chief investment officer at Merk Hard Currency Fund in California.
The dollar rose to a four-week high of 146.175 against the yen following the announcement of the trade deal. It was last up 1.55% at 146 yen.
Against the Swiss franc , it was 1.07% stronger at 0.8323 franc, matching its highest level since May 1.
The deal could serve as a template for other countries looking to sign trade agreements with the U.S., said Steve Englander, head of global G10 FX Research at Standard Chartered in New York.
"Getting a deal that looks like it's going to work is going to be risk positive. I think the market will look at what's disclosed and ask how much of this will be applicable to other countries or if it's going to be the template for other deals," Englander said.
The BoE's decision came a day after the U.S. Federal Reserve held interest rates but said the risks of higher inflation and unemployment had risen.
Sterling gave up earlier gains and was down 0.37% at $1.32410.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.41% to 100.31, hitting its highest since April 10. The euro was down 0.71% at $1.122175.
The dollar also gained against both the Swedish and Norwegian currencies after Sweden's Riksbank and Norway's Norges Bank held rates, as expected. The Swedish crown was up 0.94% at 9.7471 per dollar, while the Norwegian crown was last at 10.4313 per dollar, up 0.99%.
In cryptocurrencies, bitcoin gained 4.68% to $101,293.99. Ethereum rose 16.29% to $2,091.29.
Source: Reuters
