TOKYO/SINGAPORE: The dollar retreated from an 11-month high against a basket of currencies on Wednesday, taking a breather from a week-long rally driven by a rise in US bond yields after Donald Trump won the presidential election.
The dollar index slipped about 0.2 percent to 99.989, easing from Tuesday's high of 100.26, the strongest level since last December. A move above 100.51 would take the index to its highest since April 2003.
With its rise on Tuesday, the dollar index had climbed 4.6 percent from a trough hit on Nov. 9, hoisted by a jump in Treasury yields as Trump's victory last week led the market to think that he and a Republican-controlled Congress would embark on fiscal spending to boost the economy.
The market's focus remained squarely on the policies of President-elect Trump and US bond yields.
"The most important factor remains what kind of policies Trump enacts," said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.
"The dollar is likely to be supported until the policies are revealed. What is key for the dollar is the overall balance of Trump's policies, as some may be viewed as negative for the economy," Kadota said.
The greenback had gained a boost on Tuesday from stronger-than-expected US October retail sales data, which reinforced the outlook for a Federal Reserve interest rate hike in December.
Against the yen, the dollar eased 0.2 percent to 108.98 yen , after setting a five-month peak of 109.34 on Tuesday.
The euro rose 0.2 percent to $1.0747, having edged up from an 11-month low of $1.0709 touched on Monday.
"The dollar rally...is a function of US yields and the rise in US yields seems to be slowing down," said Sim Moh Siong, FX strategist for Bank of Singapore.
That being said, it was still too early to tell whether the market has already seen a near-term top in US bond yields, Sim added.
The benchmark 10-year Treasury yield stood at 2.224 percent on Wednesday, having backed off from a 10-month high of 2.302 percent set earlier in the week.
Elsewhere, the pound stabilised after being hit on Tuesday as media reports refocused traders' attention on the political risks associated with Britain's departure from the European Union.
Sterling edged up 0.1 percent to $1.2471 after losing 0.3 percent on Tuesday.
The Australian dollar last traded at $0.7557, having pulled up from Tuesday's one-month low of $0.7511 on the back of a bounce in commodity prices.
Comments
Comments are closed.