The dollar
stepped back from an 11-year peak against a basket of currencies after
soft spending data and disappointing earnings cast doubt on underlying
optimism about the U.S. economy, but it found some support against Asian
currencies.
Investors took profits
from recent gains in the U.S. currency ahead of a Federal Reserve
policy announcement later on Wednesday, which some think could show a
more dovish bias due to the recent plunge in oil prices.
"But
I am a bit nervous that the dollar may have a further leg to go down if
the Fed says something negative (about the U.S. economy), given that
the market is still very long in the dollar on the whole," he added.
The dollar index .DXY posted its biggest fall since early October on Tuesday to 94.10, slipping further from the 11-year high of 95.481 hit on Friday.
It last stood at 94.30 as the greenback gained a slight boost in Asia after surprise monetary easing by Singapore lifted the U.S. currency against the Singapore dollar and other Asian currencies.
Against the yen, the U.S. currency fetched 118.15 yen JPY=, about 0.3 percent above late U.S. levels but still off last week's high of 118.80.
The euro traded at $1.1340 EUR=, having risen to $1.1423 on Tuesday, extending its rebound from an 11-year low of $1.1098 hit on Monday.
But the currency's big gains - almost 18 percent in the dollar index since June - have raised concern about profits at U.S. firms.
Earnings from major U.S. firms have disappointed investors, with multinationals from DuPont <DD.N > and Caterpillar (CAT.N) to Microsoft Corp (MSFT.O) complaining that the strong dollar was hurting profits. Data
on Tuesday showed U.S. non-defence capital goods orders excluding
aircraft, a closely watched proxy for business spending plans, fell
unexpectedly for a fourth straight month in December.
It marked the longest downward stretch since 2012, stoking worries that slowing global growth and cheap oil prices were curbing business spending in the United States, one of the brightest spots in the global economy.
"U.S. economic indicators are losing a bit of momentum lately, whether it is caused by a strong dollar or not," said a trader at a major Japanese bank.
Elsewhere, the Australian dollar jumped 0.7 percent to $0.7988 AUD=D4 after higher-than-expected core inflation led investors to sharply scale back expectations of an interest rate cut next week.
The dollar index .DXY posted its biggest fall since early October on Tuesday to 94.10, slipping further from the 11-year high of 95.481 hit on Friday.
It last stood at 94.30 as the greenback gained a slight boost in Asia after surprise monetary easing by Singapore lifted the U.S. currency against the Singapore dollar and other Asian currencies.
Against the yen, the U.S. currency fetched 118.15 yen JPY=, about 0.3 percent above late U.S. levels but still off last week's high of 118.80.
The euro traded at $1.1340 EUR=, having risen to $1.1423 on Tuesday, extending its rebound from an 11-year low of $1.1098 hit on Monday.
But the currency's big gains - almost 18 percent in the dollar index since June - have raised concern about profits at U.S. firms.
It marked the longest downward stretch since 2012, stoking worries that slowing global growth and cheap oil prices were curbing business spending in the United States, one of the brightest spots in the global economy.
"U.S. economic indicators are losing a bit of momentum lately, whether it is caused by a strong dollar or not," said a trader at a major Japanese bank.
Elsewhere, the Australian dollar jumped 0.7 percent to $0.7988 AUD=D4 after higher-than-expected core inflation led investors to sharply scale back expectations of an interest rate cut next week.
No comments:
Post a Comment