Dollar struggles near 2-1/2-month lows, yen slips

The dollar struggled near 2-1/2 month lows, while the yen also sagged on Friday on reduced safe haven demand amid a switch in investors’ view that the Sino-US trade conflict would not lead to an immediate global shock, according to Reuters.

The dollar index against a basket of six major currencies stood little changed at 93.908 after touching 93.829 overnight, its lowest since July 09.

The index has fallen more than 1.0 per cent this week, with investor flows being diverted from the greenback to other currencies including emerging market ones amid an ebb in US-China trade war concerns.

“It appears that positions which were skewed towards risk aversion are being reversed across the board,” said Makoto Noji, senior strategist at SMBC Nikko Securities in Tokyo.

“The trigger was Chinese Premier Li’s comments on the yuan, which has led to hopes of a more moderate outcome to the US-China trade row,” he said.

Premier Li Keqiang pledged on Wednesday that Beijing will not engage in competitive currency devaluation, a day after his country and Washington plunged deeper into a trade war with more tit-for-tat tariffs.

The dollar had attracted strong demand thanks to trade-related tensions in recent months, as investors bet the greenback would gain at the expense of riskier currencies.