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Dollar index steady as uncertainty over various trade

deals

grows

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South Korea-U.S. trade talks drive won volatility

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U.S. retail sales data in focus for investors

By Ankur Banerjee

TOKYO, May 15 (Reuters) - The dollar wobbled on Thursday

in a turbulent week that saw investor relief at the U.S.-China

tariff truce give way to a cautious mood amid uncertainty over

the shape of various trade deals, while the South Korean won

steadied after sharp moves.

The Asian currency was volatile overnight as

investors weighed the news that officials from South Korea and

the U.S. met last week to discuss the dollar/won exchange rate.

But a report from Bloomberg that Washington is not

negotiating for a weaker dollar as part of tariff talks helped

calm the currency markets. Still, concerns that the U.S.

administration could push for a weaker dollar is likely to keep

investors wary.

The sudden lurch in the won was reminiscent of an

unprecedented two-day surge in Taiwan's currency at the

start of May, which coincided with the end of U.S.-Taiwan trade

talks in Washington that fuelled speculation of an agreement to

weaken the greenback in return for trade concessions.

"Reports of currency discussions between the U.S. and South

Korea, coupled with signs the Trump administration may tolerate

a weaker dollar, have fuelled won sentiment," said Kieran

Williams, head of Asia FX at InTouch Capital Markets.

"Broader uncertainty around the domestic outlook and trade

tensions could temper the won's upside near term."

While the dollar has clawed back some of its recent losses

against the euro, pound and the yen that were driven by concerns

over Trump's economic policies, it has slipped against most of

the emerging market currencies.

The won was last at 1,410.70 per U.S. dollar after a 0.6%

rise in the previous session. The Mexican peso was last

at 19.38 per dollar, hovering near the seven-month high it

scaled in the previous session.

The Japanese yen strengthened a bit to 146.48 per

dollar but remained close to the one-month low of 148.65 touched

earlier this week.

The dollar index, which measures the U.S. unit

against six other currencies, was steady at 101, on course for

the fourth straight week of gains.

Investor focus on Thursday will be on retail sales data

while they look for more details on possible trade deals after

easing of tensions between the U.S. and China.

The two countries on Monday announced a 90-day pause on most

of the tariffs imposed on each other's goods since early April,

leading to a brief relief rally.

"We consider there is more upside to the dollar in the near

term as market participants reassess the outlook for the U.S.

and global economies following the temporary U.S.-China trade

deal," said Kristina Clifton, an economist at the Commonwealth

Bank of Australia.

"The USD index could lift by another 2%-3% in the next few

weeks. We expect the euro, pound and yen to bear the brunt of

the dollar's recovery."