Dol­lar pauses after surg­ing on Opec deal

> Most banks re­main fo­cused on prospect of more gains for the US cur­rency

The Sun (Malaysia) - - SUNBIZ -

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

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