FOREX-Dollar ticks lower awaiting details on U.S.-China trade

(New throughout; changes dateline, previous LONDON)
By Kate Duguid
NEW YORK, Dec 16 (Reuters) - The foreign exchange market was
on hold Monday morning, with the U.S. dollar slightly lower in
anticipation of further details on the U.S.-China trade
agreement.
U.S. President Donald Trump's top trade negotiator, Robert
Lighthizer, praised a "phase one" U.S.-China trade deal which is
expected to nearly double U.S. exports to China over the next
two years, while China remained cautious ahead of the signing of
the agreement.
Speaking on Sunday, Lighthizer said there would be some
routine "scrubs" to the text, but "this is totally done,
absolutely."
The deal, announced on Friday after more than two and a half
years of on-off negotiations between Washington and Beijing,
will reduce some U.S. tariffs on Chinese goods in exchange for
increased Chinese purchases of U.S. agricultural, manufactured
and energy products by some $200 billion over the next two
years.
But although China's trade delegation expressed optimism
about the deal, some government officials are cautious. "(The
deal) is a phased achievement, and does not mean that the trade
dispute is settled once and for all," said a Reuters source in
Beijing with knowledge of the situation. Caution over the future path of trade talks pushed the
dollar index .DXY down 0.23%, last at 96.948. The trade
sensitive Chinese yuan CNH= and Australian dollar AUD= were
both off last week's four-month peaks.
"FX investors took one look at the semi-conclusion of a
"phase one" deal on Dec. 12 and were overjoyed, but came back to
the table on Dec. 13 with the feeling of having more questions
than real answers," said Stephen Gallo, European head of foreign
exchange strategy at BMO Capital Markets.
The euro EUR= , which had spiked to a four-month high of
$1.1199 against the dollar on Friday, retraced most of those
gains, last at $1.1152, nevertheless up modestly over the course
of Monday's trade. The yen JPY= , a safe-haven asset which
benefits from market uncertainty, reached a two-week low on
Friday before regaining some value to last trade at 109.50 yen
per dollar.
The "U.S.-China phase one deal offers more in terms of
negating some near-term downside risks facing the economy than
it offers for a sharp rebound in domestic or global activity,"
said Gallo.
"Importantly, our prior expectations for faster growth rates
in infrastructure investment do not seem to be coming to
fruition yet."
Elsewhere, sterling remained bolstered by expectations that
last week's resounding election win for British Prime Boris
Johnson's Conservative Party will end near-term Brexit
uncertainty. The pound was last trading at $1.335 GBP= , 0.21%
firmer on the day.


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