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Dollar Steady near 1-Month Low; Sterling Hit by Brexit Fears

2018-8-28 16:38:16Trading Strategies
Dollar Steady near 1-Month Low; Sterling Hit by Brexit Fears

The dollar was holding steady near a one-month low against a currency basket on Tuesday as a U.S.-Mexico trade deal boosted risk appetite, while the pound was pressured lower amid continuing fears over a no-deal Brexit.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was at 94.66 by 03:48 AM ET (07:48 AM GMT). The index hit a low of 94.59 overnight, its weakest level since August 2.

Concerns over heightened global trade tensions eased after the U.S. reached an agreement with Mexico on a trade deal aimed at overhauling the North American Free Trade Agreement.

However, U.S. President Donald Trump has said he could still put tariffs on Canadian autos if it refuses to agree to the new deal and also wants concessions on the country’s dairy products.

Markets also remained wary as a trade spat between the U.S. and China rumbled on after trade talks last week ended with little progress and both countries slapped fresh reciprocal tariffs on imports.

The dollar edged higher against the yen, with USD/JPY edging up to 111.14.

The euro was holding steady at one-month highs against the dollar, with EUR/USD at 1.1686.

The single currency hit its highest level of the year against the pound, with EUR/GBP rising as high as 0.9074 as markets in the UK re-opened after a holiday weekend amid more negative headlines on Brexit.

British Prime Minister Theresa May claimed that a no-deal Brexit “wouldn’t be the end of the world” as she sought to downplay a warning from Chancellor Philip Hammond last week about the damage a no deal Brexit will do the British economy.

Sterling remained steady against the softer dollar, with GBP/USD almost unchanged at 1.2887.