April 5, 2018 / 2:48 PM / in a year

FOREX-Dollar rallies as trade war fears ease

    * FX market volatility nears 2018 lows
    * Dollar/yen back above near 107 after dropping below 106
    * U.S. trade deficit widens to near 9-1/2-year high
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Adds comments, U.S. data, FX table, updates prices, changes
byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, April 5 (Reuters) - The dollar rose to a two-week
high against a currency basket on Thursday, bolstered by a
rebound on Wall Street and signs the United States is looking to
resolve a trade dispute with China.
    The U.S. currency also climbed to a three-week peak against
the yen and a 10-week high versus the Swiss franc, two
safe-haven assets that investors buy in times of market turmoil.
    "Boosting the dollar is the view that at the end of the day
Washington and Beijing might broker a trade deal that doesn't
torpedo global commerce or damage the world economy," Joe
Manimbo, senior market analyst at Western Union Business
Solution in Washington, said. 
    White House economic adviser Larry Kudlow said on Thursday
he expects the United States and China to work out their trade
differences over time and that trade barriers likely "will come
down on both sides."
    His comments prompted a recovery in the dollar.
    China, however, has not backed down. The nation's state news
agency Xinhua said on Thursday China will win any trade war with
the United States. That belief stems from the country's massive
consumer market, which has been China's one advantage from U.S.
manufacturers' point of view.
    Beijing on Wednesday imposed tariffs on key U.S. imports
including soybeans, planes, cars, beef and chemicals in response
to similar measures from the United States.
    That had spurred a rally in the yen and a sell-off in stocks
on Wednesday.
    "By choosing to hurt China rather than compete with them,
others will see this as economic war and the global stakes are
actually much higher than they have been in the last 80 years," 
   John Taylor, president and founder of research firm Taylor
Global Vision in New York, said.   
    In mid-morning trading, the dollar rose 0.3 percent against
a basket of six currencies to 90.41. Earlier, the index 
hit a two-week high of 90.454.
    In a broader sign that global currency markets had not been
rattled, a basket of currency options of the major currencies
ticked towards 2018 lows of 7.8 after a spike in February.      
    Against the yen, the dollar advanced to a 10-week high of
107.25 yen and was last up 0.4 percent at 107.23.
    The greenback surged to a 10-week high of 0.9637 Swiss franc
, last changing hands at 0.9632, up 0.2 percent.
    Data on Thursday also showed that the U.S. trade deficit
grew to a near 9-1/2-year high in February, with both exports
and imports rising to record peaks, but the shortfall with China
narrowed sharply.
    Currency bid prices at 10:26AM (1426 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.2242        $1.2277     -0.29%         +2.05%      +1.2290     +1.2237
 Dollar/Yen       JPY=        107.2300       106.7700    +0.43%         -4.83%      +107.2500   +106.7200
 Euro/Yen         EURJPY=     131.26         131.09      +0.13%         -2.90%      +131.4600   +131.0800
 Dollar/Swiss     CHF=        0.9630         0.9607      +0.24%         -1.16%      +0.9637     +0.9599
 Sterling/Dollar  GBP=        1.4017         1.4080      -0.45%         +3.74%      +1.4097     +1.4002
 Dollar/Canadian  CAD=        1.2776         1.2768      +0.06%         +1.58%      +1.2800     +1.2745
 Australian/Doll  AUD=        0.7686         0.7716      -0.39%         -1.47%      +0.7726     +0.7679
 Euro/Swiss       EURCHF=     1.1789         1.1794      -0.04%         +0.86%      +1.1805     +1.1786
 Euro/Sterling    EURGBP=     0.8731         0.8718      +0.15%         -1.72%      +0.8744     +0.8716
 NZ               NZD=        0.7279         0.7304      -0.34%         +2.72%      +0.7322     +0.7276
 Dollar/Norway    NOK=        7.8322         7.8220      +0.13%         -4.57%      +7.8389     +7.7925
 Euro/Norway      EURNOK=     9.5890         9.6064      -0.18%         -2.63%      +9.6130     +9.5598
 Dollar/Sweden    SEK=        8.4313         8.4004      +0.09%         +2.80%      +8.4360     +8.3834
 Euro/Sweden      EURSEK=     10.3233        10.3136     +0.09%         +4.92%      +10.3290    +10.2895
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Tom Finn in London)
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