Dollar pauses after surging on Opec deal
> Most banks remain focused on prospect of more gains for the US currency
LONDON: The dollar traded just off a 9 -month high against the yen yesterday, steadying after a jump along with US bond yields on the details of a deal to cut Opec oil output.
The majority of banks remain focused on the prospect of more gains for the US currency, anticipating that president-elect Donald Trump’s mix of tax cuts, spending and trade shifts will raise growth and price pressures in the United States.
But the dollar’s failure to push on strongly against the euro – again back above US$1.06 (RM4.73) in early European trade – hints there may be some fatigue in a rally that dates back two months and has deepened since Trump’s victory on Nov 8.
“You see some brokers on the street with forecasts of parity or below parity (to the euro). For us it is unlikely we will get much more strength,” said Constantin Bolz, director for currency strategy with the chief investment office of UBS in Zurich.
“The Fed is likely to hike interest rates next month and the market has fully priced that in, along with roughly two rate hikes next year. Now are we really likely to get three or four?”
The dollar’s index against a basket of six major currencies last stood at 101.42, having risen as high as 101.83 and off 13 -year peak of 102.05 set last week.
It retreated to 114.17, down a quarter of a percent on the day from a peak of 114.83 yen hit in Asian time, its strongest level since midFebruary.
Oil prices jumped around 9% on Wednesday as Opec members agreed to cut production for the first time since 2008 and the dominant reaction was through US Treasury yields, which peaked just below new highs of 2.4%. – Reuters