Sun, Apr 02, 2017 - Page 14 News List

US dollar falls after comments by a Fed official on rate hikes

Bloomberg

The US dollar dropped to a session low in choppy trading after Federal Reserve Bank of New York President William Dudley said that two more rate increases this year seem about right, although there is no need to hurry given that the US economy is far from overheating.

The Bloomberg dollar index remained near its low of the session, tracking a decline in the 10-year US Treasury bond yield, which closed at its daily low below 2.4 percent.

The greenback eked out its first weekly gain in three, although it recorded a drop of more than 3 percent for the quarter, disappointing early-year forecasts that had largely expected dollar gains to continue.

Dollar losses on the day versus G10 peers were partially offset by gains against some emerging markets and some commodity foreign exchange.

The tone was set by the rand, which fell as much as 2.6 percent on Friday before paring its losses after finance minister Pravin Gordhan was fired by South African President Jacob Zuma.

Rand price swings were sharp amid sparse liquidity, with the currency briefly paring its losses before resuming its decline.

Trading flows were surprisingly muted in the G10 space and muddied by month-end portfolio rebalancing that gave the dollar a brief lift ahead of the London fixing, said traders familiar with the transactions, who asked not to be identified, because they are not authorized to speak publicly.

The US dollar on Friday rose against the New Taiwan dollar, gaining NT$0.021 to close at NT$30.336. Turnover totaled US$569 million during the trading session.

The NT dollar was up from NT$30.488 on March 24.

The US dollar fell to a fresh low against the yen of ¥111.26, likely triggering some stop-loss sell orders from intraday longs after the pair rose to ¥112.20 overnight.

Japanese banks were largely absent from the market at the end of Japan’s fiscal year, damping flows.

The US dollar might see fresh demand when Japanese players return to the market next week, one London-based trader said.

Against the euro, the US dollar rose to a fresh high of 1.0702 euros, rebounding off a session low 1.0670, as the greenback reversed gains.

Bids to buy euros are positioned in the 1.0650 to 1.0660 zone, although there are stop-loss sell orders building below there, traders said.

Additional reporting by CNA

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