Dollar Sheds Ground Amid Trade Deal Optimism, Weak Data

The U.S. dollar weakened against some major currencies on Friday, especially the euro and pound sterling, amid renewed optimism about a potential trade deal between the U.S. and China.

Some disappointing economic data also contributed to dollar’s decline.

White House economic adviser Larry Kudlow said on Thursday that a deal between the two largest economies is “getting close” with negotiators from the two countries staying in contact every single day.

“It’s not done yet, but there has been very good progress and the talks have been very constructive,” Kudlow said.

Commerce Secretary Wilbur Ross said the talks are “down to the last details” and a deal will be completed “in all likelihood.”

Adding to the positive sentiment, China has lifted a nearly five-year ban on imports of U.S. poultry in a goodwill gesture that could lead to more than $1 billion in annual shipments to China.

The dollar index started off on a weak note and dropped to a low of 97.96 losing about 0.2%.

The euro strengthened to $1.1054, gaining about 0.3%.

Against pound sterling, the dollar weakened to 1.2901, from previous close of $1.2867.

The Japanese Yen was down notably against the dollar, with a unit of dollar fetching 108.79 yen, compared to Thursday’s close of 108.38 yen a dollar.

The dollar was down against the loonie with the pair trading at 1.3227, trailing previous close by 0.16%.

The Aussie was up nearly 0.5% against the dollar at 0.6818, while Swiss franc was up 0.18% at 0.9898.

In U.S. economic news, a report released by the Federal Reserve said industrial production in the U.S. fell by much more than expected in the month of October, due to a notable decrease in manufaturing production.

The Federal Reserve Bank of New York’s report showed a modest slowdown in the pace of growth in regional manufacturing activity in the month of November.

The report said its headlining general business conditions index edged down to 2.9 in November from 4.0 in October.

The Fed said industrial production tumbled by 0.8% in October after falling by a revised 0.3% in September. Economists had expected production to decrease by 0.4%, matching the drop originally reported for the previous month.

The Commerce Department said retail sales climbed by 0.3% in October, reversing the 0.3% drop in September. Economists had expected retail sales to rise by 0.2%.

Import prices in the U.S. fell by much more than expected in the month of October, according to a report released by the Labor Department.

The material has been provided by InstaForex Company – www.instaforex.com