Kuwait Times

Dollar recovers as pound falls back

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The dollar recovered against its major peers yesterday after taking a battering the previous day, while the pound fell back having surged on the UK’s Brexit plans. European stock markets were largely steady around midday following gains for Asian indices. “The FTSE 100 has given up early gains despite the pound continuing to pull back from yesterday’s strong rally, the index hindered by a Pearson profits warning and weakness among miners and financials,” said Mike van Dulken, head of research at Accendo Markets.

Shares in UK publisher Pearson plunged up to 28 percent after it issued a profit warning and said it would sell holdings in Penguin Random House, a joint venture with German media company Bertelsman­n. “The rising anxiety and uncertaint­y ahead of Donald Trump’s inaugurati­on this coming Friday has exposed the greenback to heavy losses,” said FXTM Research analyst Lukman Otunuga.

“With optimism slowly fading over the series of interest rate hikes under Trump and the lack of clarity provided on the proposed fiscal stimulus measures weighing on sentiment, the dollar may find itself vulnerable to further losses,” he added. The greenback plunged Tuesday following comments from the US president-elect in an interview that it was too strong and that a weak Chinese yuan was “killing us”, fuelling concerns of a possible currency war.

The sell-off marked a sharp turnaround for the US unit, which has been surging since Trump’s November election on expectatio­ns his big-spending, tax-cutting plans will fan inflation and force a Federal Reserve rate hike. Trump’s comments came days before he takes the oath of office tomorrow, with market-watchers hoping his speech will provide some detail on his plans for the US economy as well as his intentions on the global trade front.

On Tuesday, Chinese President Xi Jinping warned at the World Economic Forum in Davos against protection­ism, alluding to Trump’s plans to tear up global trade deals, saying it was like “locking oneself in a dark room. Wind and rain may be kept outside, but so is light and air”.

‘Brexit vote positive’

In European trade yesterday the dollar was up on the yen, euro and pound but struggled against higher-yielding units including South Korea’s won, the Australian dollar and Malaysian ringgit. The pound fell on profit-taking during a volatile week for the currency. Having plunged Monday to October lows against the greenback on worries about Britain’s plans for a clean break from the European Union, it bounced back sharply Tuesday.

This was after British Prime Minister Theresa May set out her plan to leave the customs union and single market in a socalled “hard Brexit”, and promised to let parliament vote on the deal. “May’s announceme­nt that both houses of parliament will vote on the final Brexit deal is positive for the pound, as the process, at a minimum, should ensure that the most severe outcomes are avoided,” said Oanda trader Stephen Innes.

Sterling shot up three percent-its biggest gain since 2008 — to more than $1.24 following her remarks, having plunged below $1.20 Monday as news emerged of her plans. “There is nothing like clarity to turn around a market,” said McKenna. In Asia yesterday, Hong Kong rallied 1.1 percent, boosted by a flood of mainland Chinese investors picking up stocks considered cheap compared with those north of the border, while a pick-up in the yuan eased fears about the mainland economy. — AFP

 ??  ?? TOKYO: A woman walks past an electronic stock board showing world market indexes at a securities firm. — AP
TOKYO: A woman walks past an electronic stock board showing world market indexes at a securities firm. — AP

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