The greenback begins Friday trading marginally higher, looking to snap a three-day losing streak.
The U.S. currency, as measured by the ICE Dollar Index, DXY, +0.09% a measure of the buck’s strength against six trading rivals, was at 95.109, up 0.1%. Earlier in the session, the popular index traded to a two-week low.
Overnight, the People’s Bank of China set the yuan USDCNY, +0.3919% mid-point at 6.9120, its weakest level since March 10, 2017. However, after the weaker fix, spot yuan moved higher when data showed China posted a record trade surplus of $34.13 billion with the U.S. in September.
“For all the talk of trade wars being easy to win, the trade data we’ve seen this morning suggests it may not be quite so straightforward,” wrote Craig Erlam, senior market analyst at Oanda.
“It would appear that when you throw a floating exchange rate into the mix—a sensitive issue in itself after the Treasury Department found China not to be a currency manipulator, despite Trump’s constant claims to the contrary—the surplus country can be quite well-shielded from tariffs while the deficit country will face quite the opposite reality.”
Read: Here’s why traders think the Chinese yuan could reach a record low against the dollar
The euro, EURUSD, -0.1552% the biggest contributor to the dollar index, was lower at $1.1581 versus $1.1596 late Thursday. Fortunes for the single currency remain tied to the ongoing debt saga in Italy. Late Thursday, the Italian parliament passed a new budget bill, which will next head to the government leadership for its nod.
“The new budget will then be submitted to the EU Commission who have already voiced grave concerns over Italy’s deficit target which they say will break the single-block’s rules. A further escalation in the war of words between Italy and the EU will weigh on the euro and make further headway difficult,” wrote Nick Cawley, analyst at DailyFX.
Read: Here are the stocks most sensitive to rising bond yields
Elsewhere, the British pound GBPUSD, -0.1964% is trying to close out its second consecutive winning week after fears of a messy U.K. breakup with the EU abated for now. The British pound was trading at $1.3222 versus $1.3235 Thursday.
Dollar volatility remains somewhat pinned to stock trading. After falling nearly 1,400 points in two sessions, futures on the Dow Jones Industrial Average YMZ8, +0.89% were up 231 points, or 0.9%, early Friday. Stocks were still looking at their worst weekly performance since March.
The Japanese yen USDJPY, +0.14% pared recent gains, with a single dollar last buying ¥112.24 versus ¥112.16 Thursday. The decline in the yen comes as U.S. equity markets are pointing to a higher open.
Read: Here’s how much damage has been done to the stock market during a powerful rout
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