Home Forex Market News Dollar Pares Rout Amid Bets Tumble Excessive; Aussie Declines

Dollar Pares Rout Amid Bets Tumble Excessive; Aussie Declines

The dollar climbed against the euro, paring yesterday’s drop that was the biggest in more than a year, amid speculation the tumble in the U.S. currency was excessive given the nation’s economic outlook.

The dollar, which plunged when a bigger-than-forecast drop in retail sales yesterday prompted traders to pare wagers the Federal Reserve will increase borrowing costs, also climbed against the yen before a U.S. report economists said will show industrial production climbed last month. The yuan rose to the strongest in seven months as the U.S. said China has shown “some renewed willingness” to let the currency strengthen. Australia’s dollar dropped against all 31 of its major peers.

“The data which sparked the move was weaker than expected but overall data-wise, and as far as the growth outlook is concerned, the U.S. looks more than favorable than elsewhere,” said Ian Stannard, the London-based head of European foreign-exchange strategy at Morgan Stanley. “We believe the overall dollar-positive trend is still very much in place. This should provide some renewed buying opportunities.”

The dollar appreciated 0.5 percent to $1.2775 per euro as of 8:40 a.m. London time after weakening 1.4 percent yesterday, the steepest decline since July 2013. The U.S. currency rose 0.2 percent to 106.13 yen, after dropping 1.1 percent yesterday, the most since April 8. The yen strengthened 0.3 percent to 135.58 per euro.

Morgan Stanley predicts the U.S. currency will strengthen to $1.24 per euro by the end of this year, Stannard said.

The yuan climbed 0.04 percent to 6.1237 per dollar, China Foreign Exchange Trade System prices show. It rose to 6.1209 earlier today, the strongest level since March 7.

Australia’s dollar fell 0.9 percent to 87.53 U.S. cents after adding 1.3 percent yesterday.

More Details

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments