Wednesday, October 27

US dollar slides for 2nd day, but outlook stays upbeat


Article content

NEW YORK — The dollar fell for a second straight session on Friday, tracking declines

in US Treasury yields, as investors booked profits after recent sharp gains, though the decline was viewed

as temporary.

US 10-year Treasury yields were last at 1.484%, down nearly six basis points.

For the week, the dollar index posted its largest percentage gain since late August, as investors looked

to the Federal Reserve hike’s reduction of asset purchases in November and a possible rate late next year.

Advertisement

Article content

Cautious market sentiment due to COVID-19 concerns, wobbles in China’s growth and a Washington gridlock

ahead of a looming deadline to lift the US government’s borrowing limit has lent support to the dollar,

seen as a safe-haven asset.

“The more hawkish stance appears to have been the key factor driving the dollar higher in late

September,” said Marc Chandler, chief market strategist, at Bannockburn Global Forex.

“However, more immediately, fiscal policy is the focus, though investors appear to be looking through

it, as many find it inconceivable that the US would default on its debt,” he added.

In afternoon trading, the dollar index slid 0.3% to 94.046, having gained 0.8% this week, the

largest weekly rise since late August.

Advertisement

Article content

Friday’s batch of US data was mixed, adding to dollar weakness ahead of the weekend.

US consumer spending increased more than expected in August, posting a 0.8% rise, but consumption was

weaker than initially thought in July, dipping 0.1% instead of gaining 0.3%.

Inflation remained elevated, but not by much. Core inflation as measured by the personal consumption

expenditures (PCE) price index, excluding the volatile food and energy components, was up 0.3% in August,

unchanged from previous month.

In manufacturing, data was more upbeat. The Institute for Supply Management (ISM) said its index of

national factory activity increased to a reading of 61.1 last month from 59.9 in August.

In other currencies, the euro rose 0.1% to $1.1595, falling about 1.1% for the week, its

Advertisement

Article content

biggest percentage fall since mid-June.

The yen bounced back against the dollar from a 19-month low overnight, with the greenback last

down 0.2% at 111.105 yen.

Commodity currencies rallied against the US dollar on Friday as well.

The Australian dollar gained 0.6% to US$0.7270 and slumped 3.6% in the third quarter – the

worst performance of any G10 currency against the dollar – as prices for Australia’s top export, iron ore,

fell sharply.

Sterling was also an underperformer last quarter, dropping 2.5%, and posting its worst week in more than

a month, amid growing supply chain problems.

Sterling was last up 0.6% though at $1.3552, just above a 9-month low at $1.3516.

In cryptocurrencies, bitcoin rallied to a nearly two-week high of just under $48,000. It was last up

Advertisement

Article content

9.4% at $47,902. Analysts cited seasonal factors, with the fourth quarter typically viewed as a

bullish period for digital assets.

Smaller coins ether and XRP, which tend to move in tandem with bitcoin, were up

nearly 10% at $3,294 and 8.2% at $1.0299, respectively.

================================================== ======

Currency bid prices at 3:17PM (1917 GMT)

Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 94.0370 94.3120 -0.29% 4.508% +94.3950 +93.9850

Euro/Dollar $1.1596 $1.1578 +0.16% -5.09% +$1.1607 +$1.1564

Dollar/Yen 111.0950 111.2800 -0.16% +7.53% +111.4850 +110.9050

Euro/Yen 128.82 128.82 +0.00% +1.50% +129.0400 +128.5600

Advertisement

Article content

Dollar/Swiss 0.9305 0.9317 -0.11% +5.19% +0.9337 +0.9283

Sterling/Dollar $1.3555 $1.3477 +0.59% -0.78% +$1.3575 +$1.3434

Dollar/Canadian 1.2633 1.2685 -0.41% -0.79% +1.2738 +1.2628

Aussie/Dollar $0.7271 $0.7227 +0.62% -5.48% +$0.7276 +$0.7193

Euro/Swiss 1.0791 1.0784 +0.06% -0.15% +1.0808 +1.0773

Euro/Sterling 0.8554 0.8593 -0.45% -4.29% +0.8623 +0.8545

NZ $0.6946 $0.6897 +0.72% -3.26% +$0.6951 +$0.6879

Dollar/Dollar

Dollar/Norway 8.6125 8.7400 -1.41% +0.35% +8.7820 +8.6160

Euro/Norway 9.9891 10.1205 -1.30% -4.57% +10.1728 +9.9867

Dollar/Sweden 8.7412 8.7585 -0.08% +6.66% +8.7878 +8.7392

Euro/Sweden 10.1379 10.1460 -0.08% +0.61% +10.1755 +10.1374

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Ritvik Carvalho in London; Editing by Nick

Macfie, Chizu Nomiyama and David Evans)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



financialpost.com

Leave a Reply

Your email address will not be published. Required fields are marked *