- Chinese data, yuan fixing boosts risk sentiment
- Euro briefly bid on report Germany to issue new debt
(New throughout, updates trading and comments to U.S. market open, previous LONDON)
The dollar index inched higher on Thursday and the Chinese currency strengthened after the Chinese central bank fixed the yuan at a stronger level than expected, boosting risk appetite.
The People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.0039. The fixing was still the weakest in more than a decade, however.
"Last night fixed over 7 and markets seem to be taking that fairly well, so perhaps some calm is installed in the market at least for the very near term," said Mazen Issa, senior FX strategist at TD Securities in New York.
Data showing a surprise increase in Chinese exports in July from a year earlier added to the improving sentiment.
The dollar fell 0.19% against the offshore yuan CNH= to 7.0681. The dollar index against a basket of currencies .DXY gained 0.07% to 97.614.
On Monday, China allowed its currency to weaken past 7 per dollar for the first time since 2008, sparking broad risk aversion on concerns that the U.S.-China trade war was escalating.
The move came in response to U.S. President Donald Trump's announcement last week that he would impose more tariffs on Chinese goods. Washington labeled Beijing a currency manipulator on Monday.
Trade tensions are likely to continue to weigh on the Chinese currency and risk appetite, with no resolution to the U.S.-China dispute in sight.
Increasingly dovish central bank policies are also adding to nerves that the global economic outlook may be worse than feared - central banks in New Zealand, India and Thailand all cut rates on Wednesday.
"The risk of these central banks trying to out-dove one another is, the more they do, the more they instill panic into market participants that this is worse than expected,” Issa said.
The euro jumped briefly on Thursday after Reuters reported that Germany is considering ditching its long-cherished balanced budget goal by issuing new debt to finance a costly climate protection package.
The single currency has been boosted in recent days by the unwind of emerging market carry trades that were funded in euros.
======================================================== Currency bid prices at 9:40AM (1340 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1202 $1.1197 +0.04% -2.33% +1.1228 +1.1182 Dollar/Yen JPY= 106.1000 106.2600 -0.15% -3.77% +106.2900 +105.9200 Euro/Yen EURJPY= 118.87 118.99 -0.10% -5.82% +119.1500 +118.5600 Dollar/Swiss CHF= 0.9774 0.9752 +0.23% -0.41% +0.9776 +0.9738 Sterling/Dollar GBP= 1.2122 1.2140 -0.15% -4.98% +1.2182 +1.2097 Dollar/Canadian CAD= 1.3288 1.3300 -0.09% -2.56% +1.3314 +1.3272 Australian/Doll AUD= 0.6797 0.6755 +0.62% -3.58% +0.6798 +0.6747 arEuro/Swiss EURCHF= 1.0950 1.0924 +0.24% -2.70% +1.0955 +1.0917 Euro/Sterling EURGBP= 0.9238 0.9222 +0.17% +2.83% +0.9265 +0.9208 NZ NZD= 0.6467 0.6444 +0.36% -3.72% +0.6469 +0.6435 Dollar/DollarDollar/Norway NOK= 8.9433 8.9529 -0.11% +3.53% +8.9614 +8.9215 Euro/Norway EURNOK= 10.0180 10.0271 -0.09% +1.13% +10.0400 +10.0040 Dollar/Sweden SEK= 9.5956 9.6372 -0.40% +7.05% +9.6386 +9.5856 Euro/Sweden EURSEK= 10.7505 10.7934 -0.40% +4.74% +10.8011 +10.7459
