United States yields may prop up dol­lar

The Gulf Today - Business - - VIEW POINT -

TOKYO: Ster­ling was flat on the day at $1.3115, nurs­ing losses af­ter it skid­ded in the pre­vi­ous ses­sion against a back­drop of po­lit­i­cal tur­moil as Bri­tish law­mak­ers this week de­bate the UK gov­ern­ment’s plans for leav­ing the Euro­pean Union.

The Brexit bill will be de­bated on Wed­nes­day, with as many as 40 of Prime Min­is­ter Theresa May’s Con­ser­va­tive law­mak­ers pre­pared to sup­port a no-con­fi­dence mo­tion against her, ac­cord­ing to the Sun­day Times news­pa­per.

Also in fo­cus, Euro­pean Cen­tral Bank chief Mario Draghi, Fed­eral Re­serve Chair Janet Yellen, Bank of Ja­pan Gov­er­nor Haruhiko Kuroda and Bank of Eng­land head Mark Car­ney will form a panel on cen­tral bank com­mu­ni­ca­tion at the Ecb-hosted con­fer­ence in Frank­furt later on Tues­day.

“Ma­jor cur­ren­cies have con­sol­i­dated in ranges to­day, but some­thing could emerge at the ECB con­fer­ence,” said Keiko Ni­nomiya, se­nior FX mar­ket an­a­lyst at SMBC Trust Bank in Tokyo.

The dol­lar in­dex, which tracks the US cur­rency against a bas­ket of six ma­jor ri­vals, was steady on the day at 94.486.

Against its Ja­panese coun­ter­part, the dol­lar inched slightly higher to 113.66 yen, but re­mained be­low its eight-month high of 114.735 hit last week.

“The dol­lar is get­ting sup­port from US yields, but I am ac­tu­ally sur­prised that it did not go higher, so per­haps the cor­re­la­tion be­tween yields and the dol­lar is break­ing down,” said Masashi Mu­rata, cur­rency strate­gist for Brown Broth­ers Har­ri­man in Tokyo.

“But with the Fed ex­pected to hike rates in De­cem­ber, the dol­lar could go higher” in the com­ing weeks, he said.

The yield on two-year US Trea­sury notes scaled a nine-year peak on Mon­day, as the yield curve re­sumed its flat­ten­ing and in­vestors priced in a 25-ba­sis-point in­ter­est rate hike by the Fed­eral Re­serve next month.

The 10-year Trea­sury yield rose to 2.407 per cent from its US close on Mon­day of 2.400 per cent. It was at 2.304 per cent as early as Nov. 8.

The euro inched up 0.1 per cent to $1.1672, hold­ing well above last week’s a 3-1/2-month low of $1.1553.

The New Zealand dol­lar was the big­gest mover in the Asian ses­sion, skid­ding 0.6 per cent to $0.6863 and on track for its fourth ses­sion of losses. It moved back to­ward its Oct. 27 low of $0.6818, which matched a low logged in May. The kiwi had risen as high as $0.6980 last week, as the Re­serve Bank of New Zealand raised its in­fla­tion fore­casts in re­sponse to the fall in the cur­rency and to the Labour gov­ern­ment’s plans for more spend­ing.

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.