Dollar hits 1-week high on yen as U.S.-China trade deal hopes rise

By Ritu, Capital Sands The dollar held an upper hand against the yen on Tuesday as optimism on a trade deal between the United States and China dented the allure of the safe-haven unit while the British pound was supported by hopes of an end to a hung parliament.

China’s Global Times, a tabloid run by the ruling Communist Party’s official People’s Daily, said on Monday on its Twitter feed the two countries are very close to a “phase one” trade deal, discounting “negative” media reports. report raised optimism the deal and lifted the dollar against the yen to as high as 109.02 yen JPY= , a one-week high, by early Asian trade on Tuesday.

“China appears positive to the deal. The dollar could rise further to around 109.50 if U.S. officials will visit China,” said Yukio Ishizuki, senior strategist at Daiwa Securities.

Last week, the Chinese government invited United States Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing for face-to-face talks, the Wall Street Journal reported.

“Trading in the next couple of weeks will be all about the U.S.-China deal,” said Daiwa’s Ishizuki.

The euro softened to $1.1013 EUR= , near one-week low of $1.10035 touched on Monday.

Sterling traded at $1.2900 GBP=D4 , supported by hopes that the ruling Conservatives could win a majority in the Dec. 12 election to end a hung parliament.

Against the euro, the British unit stood at 85.365 pence per euro, near six-month high of 85.22 touched Monday last week.

The Australian dollar fetched $0.6776 AUD=D4 , having touched a one-month low of $0.6768 overnight.

Despite rising hopes of U.S.-China trade deal, the Aussie has been pressured by a run of disappointing local economic data that has led investors to narrow the odds on another rate cut from the Reserve Bank of Australia (RBA).

Overall, currency trading is slowing down ahead of U.S.