August 6, 2018 / 2:34 PM / 2 months ago

FOREX-Trade tensions boost dollar as Chinese stocks drop

 (Updates prices, market activity and comments to U.S. market
open, new byline, changes dateline, previous LONDON)
    By Karen Brettell
    NEW YORK, Aug 6 (Reuters) - The dollar rose on Monday,
building on two consecutive weeks of gains, as investors bet
that trade war rhetoric and a strong U.S. economy would continue
to boost the greenback.
    China proposed retaliatory tariffs on $60 billion worth of
U.S. goods ranging from liquefied natural gas (LNG) to some
aircraft on Friday, as a senior Chinese diplomat cast doubt on
prospects of talks with Washington to solve their bitter trade
conflict.
    Some analysts see trade tensions as beneficial for the U.S.
dollar as the economy is better placed to handle protectionism
than emerging markets, and as tariffs may narrow the U.S. trade
deficit.
    “Trade tensions are very much dollar positive so I suspect
that’s contributing to the dollar gains today,” said Erik
Nelson, a currency strategist at Wells Fargo in New York.
    Against a broad basket of currencies, the dollar was
last up 0.24 percent to 95.369 and is within striking distance
of more-than-one-year peak of 95.652 reached on July 19.
    The dollar's gains have been more pronounced against
emerging-market currencies as investors bet that an escalation
in trade war concerns would hit these export-oriented economies
harder.
    Chinese stocks slumped nearly 2 percent on Monday.

    Since mid-April, the dollar index has gained 6
percent while an emerging-market local currency bond exchange
traded fund has fallen more than 10 percent over the
same period.
    The greenback was also boosted on Monday by disappointing
German data and concerns about the U.K.’s plan to leave the
eurozone.
    The euro fell to a five-week low of $1.1527 as
German industrial orders fell more than expected in June,
posting their steepest monthly drop in nearly a year and a half.

    The single currency was last down 0.1 percent at $1.1555.
    Britain's pound sank to an 11-month low as comments by
officials about a no-deal Brexit stoked fears Britain would
crash out of the European Union without securing a trade
agreement.
    The main U.S. economic focus this week will be Friday’s
consumer price inflation report for July, which is expected to
show a 0.2 percent increase in core inflation in the month,
according to a Reuters poll.
    
        
========================================================
    Currency bid prices at 10:17AM (1417 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1553        $1.1567     -0.12%         +0.00%      +1.1573     +1.1530
 Dollar/Yen       JPY=        111.4100       111.2500    +0.14%         +0.00%      +111.5200   +111.1600
 Euro/Yen         EURJPY=     128.75         128.70      +0.04%         +0.00%      +128.7800   +128.5100
 Dollar/Swiss     CHF=        0.9972         0.9941      +0.31%         +0.00%      +0.9984     +0.9940
 Sterling/Dollar  GBP=        1.2939         1.3005      -0.51%         +0.00%      +1.3017     +1.2920
 Dollar/Canadian  CAD=        1.3011         1.2988      +0.18%         +0.00%      +1.3039     +1.2988
 Australian/Doll  AUD=        0.7381         0.7399      -0.24%         +0.00%      +0.7405     +0.7375
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1522         1.1500      +0.19%         +0.00%      +1.1525     +1.1499
 Euro/Sterling    EURGBP=     0.8927         0.8895      +0.36%         +0.00%      +0.8932     +0.8891
 NZ Dollar/Dolar  NZD=        0.6730         0.6741      -0.16%         +0.00%      +0.6755     +0.6725
 Dollar/Norway    NOK=        8.2431         8.2536      -0.13%         +0.00%      +8.2670     +8.2436
 Euro/Norway      EURNOK=     9.5248         9.5490      -0.25%         +0.00%      +9.5536     +9.5269
 Dollar/Sweden    SEK=        8.9255         8.9133      +0.05%         +0.00%      +8.9397     +8.9095
 Euro/Sweden      EURSEK=     10.3135        10.3086     +0.05%         +0.00%      +10.3209    +10.2980
 
    

 (Additional reporting by Saikat Chatterjee in London
Editing by Nick Zieminski)
  
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