November 12, 2019 / 3:14 PM / a month ago

FOREX-Dollar lifted by cautious optimism for Trump trade speech

(New throughout; updates dateline, previous LONDON, changes byline)

By Kate Duguid

Nov 12 (Reuters) - The dollar was broadly stronger on Tuesday on guarded optimism ahead of a speech by U.S. President Donald Trump in which he is expected to delay a tariff decision on European automakers by six months, according to European Union officials.

Trump’s lunchtime speech at The Economic Club of New York will be closely watched by investors anxious for any positive news about his administration’s long-running trade war with China.

EU officials said while a further six-month delay was likely, Trump’s actions were unpredictable and he would likely keep the threat of car tariffs hanging over them as the United States and the EU pursue trade negotiations in the coming year.

“All eyes will be on the president as he addresses the Economic Club of New York, possibly speaking to the current situation with trade, likely either giving it strength or pouring cold water on the progress. Sometimes you just don’t know, and handicapping this president has proven to be quite difficult,” said Kevin Giddis, chief fixed income strategist at Raymond James.

Against a basket of six currencies, the dollar was up 0.13%, last trading at 98.330. Against the euro it was 0.16% stronger, last at $1.102.

The greenback was also higher against traditional safe-haven currencies as investor demand for risk picked up modestly; it was up 0.09% against the Japanese yen and 0.13% versus the Swiss franc.

The offshore Chinese yuan was roughly flat against the dollar at around 7, a threshold it crossed for the first time in August. The yuan weakened on political unrest in Hong Kong and after weak economic data in mainland China.

In Hong Kong, riot police fired tear gas at a university campus on Tuesday, a day after a protester was shot and a man set on fire as the police crackdown on dissent in the Chinese-ruled city has intensified.

The dollar was boosted last week when comments from the Chinese trade ministry were interpreted as a sign of progress on rolling back China-U.S. tariffs, causing traders to dump safe-haven currencies such as the yen. However, uncertainty hit again on Friday when Trump said that he had not agreed to reduce tariffs. (Reporting by Kate Duguid and Elizabeth Howcroft; editing by Jonathan Oatis)

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