TOKYO (Reuters) - The yuan held near a two-year high against the dollar in offshore trade on Tuesday on signs of a robust economic recovery in China however, doubts about a U.S. stimulus deal capped gains for other risk currencies.
Data on Monday showing a recovery in China’s consumer sector helped boost not only the yuan but other currencies, including the euro.
However, broader confidence was later dented by a fall in U.S. share prices as investors grew cautious about prospects of a stimulus deal in Washington.
U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin “continued to narrow their differences” in a telephone conversation on Monday, her spokesman said.
Pelosi hopes that by the end of Tuesday there will be “clarity” on whether a coronavirus stimulus bill can be passed before the Nov 3 presidential election, he said.
“Although Pelosi has set a Tuesday deadline for a deal, it does not seem like she has a clear conviction that there will be an agreement,” said Shinichiro Kadota, senior strategist at Barclays.
“Markets probably still think a deal before the election is unlikely.”
In early Tuesday trade, the euro held firm at $1.17695, holding a 0.44% gain made on Monday. The dollar traded little changed at 105.46 yen.
Sterling also held on to small gains made the previous day at $1.2947.
Britain’s chief Brexit negotiator David Frost said there was no basis to resume trade talks with the European Union unless there is a fundamental change in Brussels’ approach to negotiations.
Yet, investors still think British and European negotiators might be able to salvage post-Brexit trade talks to prevent disruptions that a no-deal finale to the five-year Brexit drama would cause.
Against the euro, the pound was little changed at 90.88 pence per euro, slowly recovering after hitting a five-and-half-month low of 92.90 pence on Sept 11, 2020.
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