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Trump’s Tweet Boosts Yuan; Dollar Falls

11/2/2018, 3:52:02 PMTrading Strategies
Trump’s Tweet Boosts Yuan; Dollar Falls

The Chinese yuan gained on Friday following reports that U.S. President Donald Trump said he had a productive conversation with Chinese President Xi Jinping on trade.

"Those discussions are moving along nicely," Trump wrote on Twitter Thursday. "Also had good discussion on North Korea!" Trump and Xi are due to meet at the G-20 summit later this month.

Trump said the door is still open for U.S.-China trade talks, just days after reports said he was considering imposing tariffs on all remaining Chinese imports by early December if discussions between the two leaders do not go well.

The USD/CNY pair slipped 0.1%, while the U.S. dollar index that tracks the greenback against a basket of other currencies slid 0.8% to 96.16 by 12:18 AM ET (04:18 GMT).

The People's Bank of China (PBOC) set the yuan reference rate at 6.9371 vs the previous day's fix of 6.9670.

The dollar was under pressure this week as global equity markets rebounded.

Looking ahead, investors will likely focus on the closely-watched U.S. jobs report due later in the day.

"Long-term U.S. yields have established a firm foothold above 3%, providing a strong backdrop for the dollar," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo. "And if the jobs report proves to be robust, we could see the dollar bounce back from recent losses and resume its rise."

According to Reuters, U.S. payroll figures are expected to have risen to 190,000 in October from 134,000 in the previous month.

Elsewhere, the Aussie dollar slipped 0.1% against the dollar after data showed Australia's seasonally-adjusted retail sales for September came in at 0.2%, missing the expected 0.3% and declining further from the previous month's 0.3%.

The quarterly producer price index, on the other hand, clocked in at 0.8%, compared to the 0.2% forecast and the previous quarter's 0.3%.