Dollar rebounds from 3-week low; sterling retreats
NEW YORK: The dollar recovered on Wednesday, a day after hitting a three-week low against major currencies on lowered expectations for US interest rate hikes and concerns about President Donald Trump’s ability to deliver a promised fiscal boost.
The dollar index, which measures the greenback against a basket of six major currencies, was up 0.31 percent at 99.81. It fell to 99.465, the lowest since March 28, on Tuesday.
“It’s a reversion to normalcy after the market got caught running for the exits on long dollar positions,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.
“As soon as the dollar stopped falling people wanted to come in and buy it.”
The dollar has fallen in recent weeks on weaker-than-expected economic data and worries about the Trump administration’s ability to achieve tax and fiscal reforms, analysts said.
Traders have scaled back bets the Federal Reserve would increase rates twice more by the end of 2017, interest rates futures showed on Wednesday.
Futures traders were pricing in a 48.5 percent chance the US central bank will raise rates at its June meeting, down from 71 percent on April 6, according to the CME Group’s FedWatch Tool.
On Wednesday, US Treasury Secretary Steven Mnuchin was quoted saying in the Financial Times that Trump is “absolutely not” trying to talk down the strength of the US dollar, playing down remarks by Trump in an interview last week when he said the dollar was “getting too strong.” The greenback rose 0.41 percent against the Japanese yen and was up 0.19 percent against the euro.
The euro reached a near-three-week high against the dollar on Tuesday, but with the first round of France’s presidential election just four days away and polls showing just a few percentage points separating the top four candidates, analysts said gains in the euro would be capped.
Sterling edged down from Tuesday’s six-and-a-half month high against the dollar after British Prime Minister Theresa May called a snap election for June, saying it would strengthen Britain’s hand in negotiations with the EU. Sterling was down 0.47 percent at $1.2776.
The Canadian dollar weakened against the greenback after oil prices fell to a two-week low on news of a smaller-than-expected drop in overall US crude stocks and a surprising build in gasoline inventories. The loonie was down about 0.8 percent at $1.3485. The Aussie and the New Zealand dollar also slipped against the greenback due to weakness in commodity markets, BMO’s Anderson said.—Reuters
Euro rises as French election jitters abateCurrency exchange rates