Dollar steady, yen at October highs after US stocks slide
Thu Oct 11 2018
The dollar was steady against a
basket of currencies on Thursday after spooked investors drove US stocks to
their worst fall in nearly eight months overnight.
The dollar index, a gauge of its
value against six major currencies, fell 0.11 per cent to 95.407 on Thursday,
after hitting a high of 95.79 in the previous session.
The safe-haven yen strengthened
to 112.25 against the dollar, its highest this month, taking heart from risk
aversion in the wake of warnings from the IMF over global growth and financial
stability.
The US Federal Reserve's apparent
determination to raise interest rates over the next 12 months has driven up US
Treasury yields, which have been further bolstered by good economic data. “We
expect rising inflation to keep the Fed hiking interest rates at its current
once-a-quarter pace until the middle of 2019,” Capital Economics said in a
note.
Expectations of hawkish rate
rises may have been at work on Wednesday when sellers sent the Nasdaq to close
at 7044.49, its lowest level since early July. The S&P 500 and Dow Jones
Industrial Average werent too far behind, both falling more than 3 per cent.
Benchmark 10-year yields cooled off from a seven-year high of 3.261 per cent
hit on Tuesday to 3.1667 per cent.
The euro rose 0.16 per cent to
1.1536 on Thursday after hitting a low of 1.1477 in the previous session. EU
Brexit negotiator Michel Barnier said on Wednesday the parties had agreed on
much of the withdrawal agreement ahead of a summit of the bloc's 28 national
leaders next week.
But the euro's gains are likely
to be limited with markets worried about the sustainability of Italy's public
finances, despite Italian Economy Minister Giovanni Tria stating that the
government would do everything in its power to regain the confidence of
financial markets.
Sterling traded at $1.3207, its
highest in a week, as investors bet on a reasonably British departure from EU
in March. The pound has gained more than 2 per cent versus the dollar over the
last five trading sessions.
The Australian dollar, often
viewed as a gauge of global risk appetite, traded flat at 0.7068 on Thursday.
The New Zealand's dollar, or kiwi, traded at 0.6454, near a multiyear low of
0.6422 seen on Monday.
“Traders will be focussing on the
risk-sensitive pairs as we move through the days trading with the Aussie and
kiwi in sharp focus as they are sitting at range extremes,” said Nick Twidale
of Rakuten Securities. Gold was flat at $1,194, holding below the psychological
$1,200 level.
Source: https://www.thehindubusinessline.com/