- U.S.-China deal seen reducing trade uncertainty
- Kiwi, Aussie firm, yen softens
- Elevated Swiss franc hints at caution remaining
- Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
Asian currencies inched higher on Thursday supported by hopes the U.S.-China trade deal could herald warmer relations between the world's two biggest economies and help to revive global growth.
"The message is actually very, very simple: Tariffs are not going up this year. And that's really all we need," said Ken Peng, Citi's head of Asia investment strategy.
Beijing and Washington touted the Phase 1 deal, signed overnight at the White House, as a step forward in resolving their bitter trade dispute.
U.S. Vice President Mike Pence fed optimism for further progress, saying further Phase 2 discussions had already begun.
That put the New Zealand dollar on track for its first intra-day rise in a week and the kiwi's 0.2% lift led small but broad-based gains. It last traded at $0.6635 NZD=D3 .
The Chinese yuan, the most sensitive currency to the U.S.-China trade relationship, drifted back toward a six-month peak hit on Tuesday, adding 0.1% to 6.8842 per dollar CNY= .
The safe haven Japanese yen JPY= was a fraction softer at 109.92 per dollar, while the Australian dollar held a tad firmer at $0.6908 AUD=D3 .
The greenback was also marginally lower against the euro EUR= and pound GBP= , with analysts figuring a bounceback in the world economy could be negative for the dollar.
Against a basket of currencies .DXY the dollar sat at 97.195, close to a week low.
The centrepiece of the trade deal is a pledge by China to purchase at least an additional $200 billion worth of U.S. farm products and other goods and services over two years.
The United States will also cut by half the tariff rate it imposed on Sept. 1 on a $120 billion list of Chinese goods, to 7.5%.
Yet market exuberance was checked because much of this was priced in already and because it addresses few of the issues that led to the trade conflict in the first place.
The agreement does not fully eliminate tariffs. It is vague on enforcement. It makes no real progress on host of thorny problems from intellectual and many analysts are sceptical that the purchase targets are realistic.
The safe-haven Swiss franc's overnight rally to a 15-month high of 0.9680 per dollar - close to where it held in Asian trade - points to the level of caution.
"I'm not sure that there's any hidden gold nugget," said Westpac FX analyst Sean Callow.
"There's a sense of markets having traded off the positive vibes of the trade agreement for long enough, and it's very hard to see where the upside is from here," he said.
"If there is a step towards freer trade and lower tariffs, then it's obviously not going to happen anytime soon."
