SYDNEY, Nov 16 - The U.S. dollar drifted lower in Asia on Monday, heading into a week that is likely to see increased rhetoric on currencies from both China and visiting U.S. President Barack Obama.
The United States and China sparred over exchange rates at a meeting of Asia Pacific leaders on Sunday, a move that quashed speculation China may allow some further yuan appreciation in coordination with Obama's first trip to Beijing. [ID:nSP43459].
That could lead to some short-covering in the euro/yen pair EURJPY=R later in the session, traders said. The euro had fallen in the previous session against the Japanese currency after shorts had been initiated on the hopes that a rising yuan will take some pressure off the euro EUR=.
Market talk has been swirling that a rising yuan would lift other currencies across the region and take some of the upward pressure seen in the euro against the U.S. dollar.
"We suspect that (further) yuan appreciation would leave eurozone officials more comfortable with euro trading above $1.5000 since the region would receive an offsetting boost in competitiveness against Asian currencies," said John Kyriakopoulos, currency strategist at National Australia Bank (NAB).
The euro inched up to $1.4930 EUR= from $1.4916 late on Friday. It also held steady on the yen at 133.71 yen, recovering from a low of 132.80 yen on Friday.
The dollar index .DXY =USD was down at 75.22, well within a downtrend channel that stretches back to May. It had fallen broadly on Friday after data showed a wider U.S. trade deficit and weaker consumer sentiment.
The U.S. trade gap unexpectedly widened by 18.2 percent in September, as imports from China increased. This data came as Obama told other Asia Pacific leaders in Singapore that failure to rebalance the global economy would lead to further crisis.
Such rebalancing, say analysts, would mean further falls in the U.S. dollar and gains in Asian currencies. China accounts for about 40 percent of the U.S. trade deficit, so the largest fall in the dollar would have to be against the yuan.
"This would contribute substantially to reducing global trade imbalances by cutting China's huge surplus and reducing the large U.S. deficit," NAB's Kyriakopoulos added.
Meanwhile, the yen JPY= was slightly firmer at 89.54 per dollar, from 89.63 late on Friday ahead of Japanese July-Sept gross domestic product (GDP) report. Asia's largest economy is expected to have grown 0.7 percent, following a 0.6 percent expansion in the second quarter. [ECONJP]
Also in Japan, Bank of Japan Governor Masaaki Shirakawa and European Central Bank council member Christian Noyer are due to speak at a forum.
U.S. retail sales data for October, at 1330 GMT on Monday, could move the dollar. Economists expect a 0.9 percent increase in sales, compared to a 1.5 percent drop in September.
The United States and China sparred over exchange rates at a meeting of Asia Pacific leaders on Sunday, a move that quashed speculation China may allow some further yuan appreciation in coordination with Obama's first trip to Beijing. [ID:nSP43459].
That could lead to some short-covering in the euro/yen pair EURJPY=R later in the session, traders said. The euro had fallen in the previous session against the Japanese currency after shorts had been initiated on the hopes that a rising yuan will take some pressure off the euro EUR=.
Market talk has been swirling that a rising yuan would lift other currencies across the region and take some of the upward pressure seen in the euro against the U.S. dollar.
"We suspect that (further) yuan appreciation would leave eurozone officials more comfortable with euro trading above $1.5000 since the region would receive an offsetting boost in competitiveness against Asian currencies," said John Kyriakopoulos, currency strategist at National Australia Bank (NAB).
The euro inched up to $1.4930 EUR= from $1.4916 late on Friday. It also held steady on the yen at 133.71 yen, recovering from a low of 132.80 yen on Friday.
The dollar index .DXY =USD was down at 75.22, well within a downtrend channel that stretches back to May. It had fallen broadly on Friday after data showed a wider U.S. trade deficit and weaker consumer sentiment.
The U.S. trade gap unexpectedly widened by 18.2 percent in September, as imports from China increased. This data came as Obama told other Asia Pacific leaders in Singapore that failure to rebalance the global economy would lead to further crisis.
Such rebalancing, say analysts, would mean further falls in the U.S. dollar and gains in Asian currencies. China accounts for about 40 percent of the U.S. trade deficit, so the largest fall in the dollar would have to be against the yuan.
"This would contribute substantially to reducing global trade imbalances by cutting China's huge surplus and reducing the large U.S. deficit," NAB's Kyriakopoulos added.
Meanwhile, the yen JPY= was slightly firmer at 89.54 per dollar, from 89.63 late on Friday ahead of Japanese July-Sept gross domestic product (GDP) report. Asia's largest economy is expected to have grown 0.7 percent, following a 0.6 percent expansion in the second quarter. [ECONJP]
Also in Japan, Bank of Japan Governor Masaaki Shirakawa and European Central Bank council member Christian Noyer are due to speak at a forum.
U.S. retail sales data for October, at 1330 GMT on Monday, could move the dollar. Economists expect a 0.9 percent increase in sales, compared to a 1.5 percent drop in September.
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