Dollar approaches 13-month high; rouble, Turkish lira downtrodden

A man looks at a monitor showing the Japan’s Nikkei average (bottom left) and the exchange rates between the Japanese yen and the US dollar (bottom right) in Tokyo, March 19, 2015. — Reuters pic
A man looks at a monitor showing the Japan’s Nikkei average (bottom left) and the exchange rates between the Japanese yen and the (bottom right) in Tokyo, March 19, 2015. — Reuters pic

TOKYO, Aug 10 — The dollar stood tall this morning, hovering just short of a 13-month high against a basket of peers as European currencies such as the pound and euro continued to lose traction.

The Russian rouble dropped to its weakest since late 2016 after Washington said it would impose fresh sanctions on Moscow, while the lira plumbed a record low in the wake of a diplomatic rift with the United States.

The dollar index, which measures the greenback’s strength against a group of six major currencies, was up 0.05 per cent at 95.550 after gaining 0.5 per cent overnight. A rise above 95.652 would take the index to its highest since July 14, 2017.

In contrast, the pound has slumped 1.4 per cent this week amid increasing speculation Britain will leave the European Union without an agreement regarding its future relationship with Brussels.

Sterling was little changed at US$1.2830 (RM5.23) after plumbing a one-year low of US$1.2819 overnight.

The euro was steady at US$1.1524 after brushing a seven-week trough of US$1.1516.

The single currency had retreated 0.7 per cent overnight, its decline accelerating after the European said that risks to are increasing as the risk of protectionism and the threat of higher US tariffs sap confidence.

The euro was down 0.4 per cent for the week, dogged by renewed investor concerns that Italy was heading for a costly and unsustainable spending spree.

“The dollar also has an edge on the euro amid continuing repatriation of funds to the United States, and the pound looks to keep retreating indefinitely with ‘no-deal Brexit’ the main driver,” said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities.

The dollar dipped 0.1 per cent to 110.92 yen, nudged off a session-high of 111.165. The pair has been caught in a relatively narrow 111.53-110.71 band this week.

“Dollar/yen is bound in range, with caution toward the US-Japan trade talks capping the pair’s upside, but it is also seeing downside support before the US CPI release,” said Imaizumi at Daiwa.

The US consumer price (CPI) report for July is expected to show likely increased 0.2 per cent, after rising 0.1 per cent in June.

The United States and Japan yesterday began what the two sides call “free, fair and reciprocal” negotiations on trade, with the discussions due to continue this morning.

The yen was broadly lifted for the time being, edging higher versus the euro and Australian dollar, supported by risk aversion with across the region in retreat.

Meanwhile, the rouble retreated overnight to its lowest since November 2016, weakening beyond the psychologically important 65-per-dollar threshold.

The Turkish lira fell to a fresh record low of 5.588 after a meeting yesterday between a Turkish delegation and US officials in Washington yielded no apparent solution to a diplomatic rift over the detention in Turkey of a US pastor.

Elsewhere, the New Zealand dollar remained on the back foot, stretching its overnight slide to US$0.6598, its lowest since March 2016.

The kiwi lost 2 per cent yesterday after the Reserve Bank of New Zealand surprised the market by committing to holding rates at until the end of 2020. — Reuters

Source: The Malay Mail Online

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