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* Sterling hits near one-year low vs euro on Brexit concerns
* Graphic: World FX rates in 2018 By Saikat Chatterjee
LONDON, Aug 28 (Reuters) – The dollar fell to a near
one-month low against a basket of its rivals on Tuesday as a
U.S.-Mexico trade deal aimed at overhauling the North American
Free Trade Agreement boosted appetite for riskier assets.
With the Chinese central bank allowing its currency to
strengthen against the dollar via its daily fixings, some
strategists said trade tensions may be receding for now.
“The Chinese authorities have stepped in to calm the
currency markets and risk appetite is slightly positive,” said
Alvin Tan, a currency strategist at Societe Generale in London.
Prior to the market opening, the People’s Bank of China
(PBOC) raised its daily yuan midpoint by almost 0.7 percent, the
most in nearly 15 months.
On Friday, the central bank said it was adjusting its
methodology for fixing the yuan’s daily midpoint in order to
keep the currency market stable amid ongoing trade tensions
between Washington and Beijing. Against a basket of its rivals , the dollar hit its
lowest since Aug. 1 at 94.602 in thin London trading before
consolidating its losses.
The United States and Mexico agreed on Monday to overhaul
the North American Free Trade Agreement (NAFTA), putting
pressure on Canada to agree to new terms on auto trade and
dispute settlement rules to remain part of the three-nation
pact. “The deal provides the impression that the U.S. President is
less interested in causing a row at the moment but is making an
effort to come home with constructive results from the theatres
of trade war,” said Esther Reichelt, an FX strategist at
Commerzbank.
The euro edged 0.2 percent higher to $1.1696,
despite worries that Italy’s public deficit could exceed the
European Union’s ceiling of 3 percent of gross domestic product,
according to senior officials. Among the major losers in the currency markets was sterling
as London traders returned after a long weekend to more negative
headlines on the Brexit front.
Against the euro , sterling hit its weakest level
in 2018 after the French Prime Minister Edouard Philippe asked
his ministers to prepare contingency measures in case of a
no-deal Brexit.
Reporting by Saikat Chatterjee; Editing by Mark Potter)
Reuters Messaging: saikat.chatterjee.reuters.com@reuters.net))
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