Currencies mark time before trade deal; UK data eyed

Major currencies were closeted within tight ranges on Wednesday as investors awaited the signing of a US-China trade deal, with the greenback holding above a one-week low against its rivals.

Though the formal agreement, due in the early US hours, is aimed at drawing a line under 18 months of tit-for-tat tariff hikes that have hurt global growth, it will not end the trade dispute between the world's two largest economies.

“I don't think the market is fully convinced about a closure on the trade conflict front as the issue has caused a lot of damage to the world economy,” said Neil Mellor, a senior FX strategist at BNY Mellon in London.

US Treasury Secretary Steven Mnuchin said existing tariffs on Chinese goods would stay, pending further talks.

Against a basket of its rivals, the dollar was steady at 97.4, just shy of a one-week low of 97.29. The Chinese currency in the offshore market was broadly steady.

The Australian dollar, a relatively volatile barometer of trade tensions, was a shade weaker at $0.6893.

US President Donald Trump is slated to sign the Phase 1 trade agreement with Chinese Vice-Premier Liu He at the White House at 1630 GMT.

Washington has already agreed to suspend tariffs on $160 billion of some Chinese-made electronics, and to halve existing tariffs on $120 billion of other goods to 7.5 per cent.

But it will leave in place 25 per cent tariffs on a vast, $250-billion array of Chinese industrial goods and components used by US manufacturers.

A source told Reuters that China has pledged to buy almost $80 billion of additional manufactured goods from the US over the next two years under the deal, although some US trade experts called that unrealistic.

Elsewhere, the British pound was broadly steady at $1.3014, after sustaining some losses in recent sessions thanks to a chorus of dovish comments from central bank policymakers.

The only major data in the European session is UK price data due at 0930 GMT, where inflation is expected to grow 1.5 per cent in December from a year-ago period.