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Forex – Dollar Falls Despite Easing Syria Tension

The dollar slid despite revival of risk appetite – The dollar slid in Asia on Friday morning as U.S. trade outlook remained uncertain, despite improving risk appetite amid the easing geopolitical worries over Syria. The market also watched closely China’s trade balance figures that can be directional drivers for risk assets and cues for Sino-U.S. trade relations.

The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 89.47 at 11:00PM ET (03:00 GMT), down 0.02%. It climbed up to the 89.60 range overnight but slid again in late morning.

Trump tempered down the geopolitical tensions in the Middle East after suggesting a military action at Syria may not be imminent, boosting market sentiment overnight in Asia.

Trump said he considered rejoining the Trans-Pacific Partnership (TPP), a pact he withdrew from after he took office. This signals a shift in the Trump administration’s tone from a hawkish one as it has known to be embracing protectionism to vow “America First”.

Trump also said the U.S. is moving towards resolving trade disputes and that China and the U.S. might not levy any new tariffs on each other after all.
The USD/JPY pair edged up 0.07% to 107.38. The rebound in market sentiment meant less demand for safe-haven assets such as the yen.

The AUD/USD pair gained 0.28% to trade at 0.7777. The Aussie remained bullish ahead of China data. The Reserve Bank of Australia released the Financial Stability Report, in which it noted that the banking system remains \"resilient\" overall, but China trade balance data and high household debt can pose downside risks.

As Australia’s largest trading partner, China reporting more imports of copper and iron ore, which are Australia’s key exports, could send the sentiment-linked Aussie higher, and vice versa.

In China, The People\'s Bank of China set the fix rate of yuan against the dollar at 6.2898 versus the previous day\'s 6.2834. The USD/CNY pair eased 0.06% to trade at 6.2889.

Elsewhere in Asia, Hong Kong’s Monetary Authority, intervened to buy the Hong Kong dollar for the first time since 2005, after the USD/HKD pair fell to 7.85, the weak end of its permitted range. The city’s de-facto central bank bought a total of HK$3.258 billion ($415 million), including HK$816 million it purchased on Thursday.

The Monetary Authority of Singapore (MAS) also tightened monetary policy for the first time in six years on Friday, and acknowledged risks from the Sino-U.S. trade tensions.

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