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FOREX-Dollar slips as U.S. yields decline on risk aversion

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The dollar depreciated on Thursday as risk aversion in the broader markets pushed US benchmark rates to their lowest level in nine days.

The dollar index versus a basket of six major currencies fell 0.2% to 97.081.

The index climbed to a one-week high of 97.444 the previous day, thanks to stronger than expected US retail sales and a fall in sterling.

But it declined slightly as safe haven returns fell as a result of weak US housing market data and worries over the protracted US-China trade dispute.

“The dollar essentially made the previous gains when Treasury yields fell, as well as the IMF’s comments, and returned to their level of a few days ago,” said Takuya Kanda, chief executive of the GaitameCom Research Institute. .

Various economic data have given contradictory signs about the state of the US economy, but that does not change the dollar as a whole, which is under downward pressure due to an expected rate cut by the Federal Reserve. later this month, said Kanda.

The International Monetary Fund (IMF) said on Wednesday that the greenback was overvalued by 6% to 12%, based on short-term economic fundamentals.

The Fed is set to lower interest rates by 25 basis points at its political meeting on July 30-31, with some in the market betting on a larger cut of 50 basis points.

Sterling was a little higher at $ 1.2438. It fell to $ 1.2382, its lowest level since April 2017 on Wednesday, because of the growing risk that Britain will leave the European Union in a Brexit without a contract, before the sale is reduced.

The euro contributed to modest day-to-day gains and edged up 0.1% to $ 1.1238. The gains of the single currency have been limited, as they were held back by expectations of easing the European Central Bank as early as next week.

The dollar was down 0.2% to 107,730 yen, after reaching 107,640, its lowest level since July 3rd.

The Australian dollar rose after Thursday’s data showed that the country’s unemployment rate remained stable and underemployment declined in June, reducing the Reserve Bank of Australia’s short-term easing prospects. .

The Australian dollar was up 0.3% to $ 0.7031.

“The Australian dollar has gained a significant share of its support from the June underemployment rate, which has risen from 8.6% to 8.2%,” said Masafumi Yamamoto, chief foreign exchange strategist at Mizuho Securities in New York. Tokyo.

The underemployment rate has a stronger correlation with key rates and wages relative to the unemployment rate and is expected to attract more attention in the future, Yamamoto said.

The New Zealand dollar hit a high of $ 0.6745 over three months. The kiwi rose more than 0.5% this week, supported by positive domestic factors such as high inflation.

Published by Skrimon
Author, TopAsiaFX

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