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Dollar Off Lows as Germany Dents Brexit-Deal Hopes, Pressuring Pound

2018-9-6 12:01:41Basics of Trading
 Dollar Off Lows as Germany Dents Brexit-Deal Hopes, Pressuring Pound

The dollar moved off session lows against its rivals Wednesday after a German government spokesperson said it was preparing for all Brexit scenarios, including a no-deal, knocking back earlier optimism that a deal was likely.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.25% to 95.13.
“If we do not get to an agreement [on Brexit] - a scenario we don’t want - there will not be a transition phase,” said spokeswoman Ulrike Demmer. “To be equipped for all events, preparations for the case of a no-deal must also take place.”
The remarks saw the pound quickly pare its lofty gains, which had followed an earlier Bloomberg report, citing sources, claiming the U.K and Germany were willing to soften their stance on key Brexit demands, thought to be sticking points holding up any progress in Brexit talks.
GBP/USD rose 0.45% to $1.2912 after trading as low as $1.2786.
The update on Brexit proceedings come as the Canadian dollar remained subdued as U.S. and Canada resumed trade talks on revamping the North American Free Trade Agreement (NAFTA).
An unchanged rate decision from the Bank of Canada also weighed on the loonie, though analysts remained optimistic that the central bank will lift rates in October.
USD/CAD rose 0.05% to C$1.3193.
Assuming trade tensions and emerging market struggles don't intensify, "we believe the BoC will raise interest rates at its October meeting, consistent with its gradual approach to policy normalization," National Bank Financial said.
USD/JPY rose 0.10% to Y111.55 as concerns that the U.S. could impose new tariffs on China as soon as Thursday increased demand for safe-haven yen.
The Trump administration could impose a 25% tariff on $200 billion worth of Chinese imported goods after the comment period expires on Thursday.
EUR/USD rose 0.35% to $1.1622, shrugging off mixed eurozone economic data as services PMI was in line with economists' forecast. But retail sales fell short.