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Dollar firm after Chinese growth hits 28-year low

Matt Cardy | Getty Images

The dollar held near a two-week high on Monday, shrugging off concerns about weakening global growth and data showing China's economy slowed sharply in 2018.

The greenback has enjoyed its first weekly gain since mid-December, buoyed by hopes for a thaw in U.S.-China trade tensions and stronger-than-expected U.S. industrial production numbers.

Going into 2019, weakness in the dollar was a consensus view among currency market traders. The bet was that the U.S. central bank would stop raising interest rates and the economy would slow after a fiscal boost last year.

The dollar index, which measures its strength against a group of six major currencies, on Monday was steady at 96.33.

"The U.S. dollar is currently benefitting from its role as safe currency haven," said Esther Maria Reichelt, an FX strategist at Commerzbank in Frankfurt.

"The Federal Reserve could cushion a weaker economy with monetary policy measures... protecting the U.S. quite well from weakening global growth and making the dollar the currency of choice," she added.

U.S.-China trade friction has put pressure on China's economy, with the latest data showing the world's second-biggest economy slowing further in the last quarter of 2018. Markets appeared to take the outcome, largely in line with expectations, in their stride.

The euro was up 0.09 percent at $1.1371 and was headed for its first daily gain in over a week but remained in close reach of a two-week low of $1.1353 brushed on Friday.

The was steady at $0.7166 after ending Friday on a loss of 0.3 percent. The Aussie was largely unfazed by China's growth numbers though analysts agree that any sharp drop in demand from its biggest trading partner would put a dent in local assets.

The U.S. financial markets will be closed on Monday for Martin Luther King Jr. Day.