April 3, 2018 / 2:01 AM / in 19 days

Dollar gains as risk appetite improves, but outlook remains weak

NEW YORK (Reuters) - The dollar rose on Tuesday, led by gains against the yen and Swiss franc, as risk appetite improved and Wall Street’s main indexes advanced, helping the currency stabilize after sharp declines the previous day.

FILE PHOTO: Bank notes of different currencies, including Euro, U.S. Dollar, Turkish Lira or Brazilian Reais, are photographed in Frankfurt, Germany, in this illustration picture taken May 7, 2017. REUTERS/Kai Pfaffenbach/Illustration /File Photo

The outlook for the dollar, however, remains murky due to global trade tensions. The greenback has lost 2 percent in the year so far.

“At the moment, support from high expectations for further monetary policy tightening from the Federal Reserve has been offset by ongoing political pressures and global trade uncertainties,” Fawad Razaqzada, market analyst at Forex.com in London, said.

China on Sunday announced tariffs on $3 billion in imports of U.S. food and other goods in response to U.S. tariffs on imports of aluminum and steel, a skirmish that investors fear is a prelude to a broader trade war.

The Trump administration is expected to announce this week U.S. tariffs on $50 billion to $60 billion in Chinese imports. On Tuesday China’s ambassador to the United States said Beijing will take counter-measures of the “same proportion” and scale if Washington imposes further tariffs.

In mid-morning trading, the dollar rose 0.2 percent against a basket of currencies to 90.218.

Analysts said investors were also focused on U.S. payrolls data and comments by Fed Chairman Jerome Powell at the end of the week, which should help determine the short-term direction of the dollar.

Against the yen, which tends to benefit in times of economic uncertainty, the dollar snapped three days of losses to trade 0.5 percent higher at 106.43 yen. Traders though are still betting on a stronger yen and a broadly weakened dollar if the trade tensions escalate.

“U.S. protectionist measures implicitly signal the administration’s desire for a weaker dollar – and such expectations are likely to be entrenched in FX markets until credibly broken,” said Viraj Patel, currency analyst at ING in London.

The dollar also advanced versus another safe haven, the Swiss franc, rising 0.3 percent to 0.9584 franc.

The euro tumbled after a survey showed the euro zone’s manufacturing boom faltered for a third month in March, although output remained robust.

The euro was last down 0.3 percent at $1.2258.

The Australian dollar, meanwhile, rose 0.4 percent to US$0.7685 versus the dollar, above a three-month low set last week. The currency reacted little to the Reserve Bank of Australia’s decision to keep its cash rate at a record low 1.5 percent as expected on Tuesday.

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Currency bid prices at 10:14AM (1414 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar EUR= $1.2256 $1.2300 -0.36% +2.17% +1.2335 +1.2255

Dollar/Yen JPY= 106.3900 105.8800 +0.48% -5.57% +106.5700 +105.7000

Euro/Yen EURJPY= 130.40 130.24 +0.12% -3.54% +130.9100 +130.0000

Dollar/Swiss CHF= 0.9587 0.9552 +0.37% -1.60% +0.9591 +0.9533

Sterling/Dollar GBP= 1.4039 1.4043 -0.03% +3.90% +1.4089 +1.4022

Dollar/Canadian CAD= 1.2843 1.2910 -0.52% +2.12% +1.2923 +1.2823

Australian/Doll AUD= 0.7670 0.7662 +0.10% -1.68% +0.7707 +0.7653

ar

Euro/Swiss EURCHF= 1.1753 1.1750 +0.03% +0.55% +1.1775 +1.1741

Euro/Sterling EURGBP= 0.8729 0.8760 -0.35% -1.73% +0.8764 +0.8727

NZ NZD= 0.7247 0.7211 +0.50% +2.27% +0.7270 +0.7196

Dollar/Dollar

Dollar/Norway NOK= 7.8383 7.8868 -0.61% -4.49% +7.8965 +7.8205

Euro/Norway EURNOK= 9.6077 9.7053 -1.01% -2.45% +9.7158 +9.5970

Dollar/Sweden SEK= 8.3892 8.3900 -0.37% +2.29% +8.4008 +8.3582

Euro/Sweden EURSEK= 10.2835 10.3216 -0.37% +4.51% +10.3470 +10.2720

Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Tommy Wilkes in London; Editing by Susan Thomas

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