FOREX – Dollar Remains Static vs Yen as US Yields Pull Back Lows
On Wednesday, the dollar remained static against yen as US yields succeeded from its low hits. This was due to the worsening concerns on the trade war between US and China. However, these persistent worries on the trade gap are likely to control the recovery of the dollar.
US President Donald Trump threatened to impose more China’s tariffs hence prompted a heated response from China.
As a result, the dollar shortly changed at 110.08 yen after a 109.55 trench on Tuesday in eight days. The rising conflicts resulted in global equities in a sell-off and risk aversion.
During political and market turmoil, the yen gains most of the time. However, as the degree of calm returned to wider markets, greenback revived against yen.
The safe-haven US Treasury yields increased from lows in three weeks while Wall Street cut a bulk of their losses.
Further, the US housing also pushed the Treasury yields off their lows.
Senior Strategist Shin Kadota of Tokyo’s Barclays said that the dollar has managed to stabilize versus the yen.
“But its rise above 110.00 looks precarious as trade tensions linger in the background,” Kadota said.
As per Kadota, the threat of a trade tension is a theme that could eventually dominate the cut-induced benefits of the US economy.
In a Portugal forum, European Central Bank President Mario Draghi called for a patient method to European monetary policy. In light of this, the euro got a 0.05 % decrease at $1.1584 after its lows of $1.1528 in two weeks.
The dollar index went at 95.026 after an 11-month advanced of 95.296 on Tuesday despite the risk aversion.
“Along with the Swiss franc and the yen, the dollar is also a safe haven currency, although perhaps less so than the yen. The dollar’s safe-haven status, however, could come under question as it has also become a high-yielding currency,” Kadota said.
Dollar eases on the 11-month peak as trade turmoil looms
On Wednesday, the greenback breaks off after advancing an 11-month peak in the previous sessions. After its recent rally, investors merged bets, however; the US-China trade dispute concerns dragged sentiments on the verge.
Currency Strategist Alvin Tan of London’s Societe Generale said that investors are waiting for the next development on the trade war.
“But the sentiment is still quite nervous,” he said.
Against its all rivals, the greenback was flat at 95.13, which was slightly below the 95.30 hit in the previous sessions, on Wednesday.