Forex – Yen Falls as U.S., China Prepares Trade Talks Next Week; Yuan Rises

© Reuters. – The Japanese yen fell against the U.S. dollar while the Chinese yuan gained on Friday in Asia on hopes that the upcoming U.S.-China trade talks would make some progress.

The pair traded 0.7% higher at 108.35 by 10:57 PM ET (03:57 GMT). The pair slipped 0.1% to 6.8643.

Market sentiment recovered somewhat after the Commerce Ministry confirmed in a statement that the U.S. and China would begin another round of trade talks next week. Deputy U.S. Trade Representative Jeffrey Gerrish will lead the U.S. delegation for the negotiations on Jan. 7 and 8.

Meanwhile, the pair rose 0.3% to 0.7026 after China’s for December improved to 53.9.

The that tracks the greenback against a basket of other currencies edged up 0.1% to 95.945.

Dallas Fed President Robert Kaplan acknowledged issues such as the deceleration of global growth, tightening of financial conditions and widening credit spreads in an interview with Bloomberg on Thursday.

“My own view is we shouldn’t take any further action on interest rates until these issues are resolved for better or for worse…,” he said.

“So I would be an advocate of taking no action during the first couple of quarters of this year…we should be patient and give some time for this economy and watch how this situation unfolds.”

A dovish Fed could put the greenback under pressure in the near future, analysts said.

“A weaker dollar should benefit emerging market currencies, but for now they are hamstrung by all the uncertainty around China,” said Ray Attrill, head of currency strategy at NAB.

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