NT dollar advances as greenback stalls on soft sentiment

Staff writer, with CNA and Reuters

Sun, Aug 18, 2019 - Page 14

The New Taiwan dollar on Friday rose against the US dollar, gaining NT$0.039 to close at NT$31.366, flat from NT$31.363 on Aug. 8.

The market was closed on Aug. 9 due to Typhoon Lekima.

Turnover totaled US$608 million during the trading session.

The greenback opened at the day’s high of NT$31.410, moving to a low of NT$31.330 before rebounding.

Elsewhere on Friday, the US dollar ended roughly flat, retracing the morning’s move higher, after worries tied to trade tensions and a US Federal Reserve rate cut weighed on consumer sentiment and a report that Germany might run a deficit to boost growth lifted the euro.

Germany’s right-left coalition government would be prepared to ditch its balanced budget rule and take on new debt to counter a possible recession, Der Spiegel magazine reported.

The news lifted the euro against the US dollar, but the single currency nevertheless remained 0.14 percent lower on the day at US$1.1091.

“EUR-USD reversed from over two-week lows to highs of US$1.1106 at mid-morning. The move higher came as reports circulated that Germany may shift to deficit fiscal spending should Germany head into recession,” Action Economics LLC analysts wrote.

“The FX [foreign exchange] market is geared up for further easing (from the European Central Bank) in September, though more talk like this will keep ongoing pressure on EUR-USD,” they said.

Earlier on Friday, the euro fell to a two-week low of US$1.1067, shy of the two-year low of US$1.1025 it reached on Aug. 1.

Friday morning’s fall was caused by growing expectations of an interest rate cut by the European Central Bank (ECB) after Bank of Finland Governor Olli Rehn, a member of the ECB’s Governing Council, on Thursday suggested that the ECB could restart its quantitative easing program and was open to extending it into equity purchases.

“Global markets started Friday in a better mood, with sentiment boosted by expectations for the European Central Bank to err on the side of bold stimulus as soon as central bankers’ coming meeting on Sept. 12,” Western Union Business Solutions LLC senior market analyst Joe Manimbo said.

Also pulling the US dollar lower was the University of Michigan consumer sentiment index, which fell to 92.1 early this month, the lowest reading since January, from 98.4 last month. The survey’s current conditions measure dropped to its lowest level since late 2016.

The consumer sentiment data came after the US Treasury yield curve inverted this week, which historically has preceded US recessions.

The inversion stoked worries about the effects of a US-China trade war. The curve was slightly steeper on Friday at 6.1 basis points.

Measured against a basket of six other major currencies, the US dollar was higher by 0.05 percent at 98.197. It has recovered by 1.2 percent from its three-week low on Aug. 9.