The US dollar on Friday capped it worst week in two months as softer-than-expected trade data from China added to signs that investors might be falling out of love with the post-US election trade.
The US dollar index, which measures it against six of the other top world currencies, was down fractionally for a third straight day in London trading, ending the week with a loss of about 1 percent.
Individually, the greenback stood at 114.7 yen having given up modest ground made in Asia, while the euro clawed up to US$1.0630 to bolster a fourth straight week of gains.
In Taipei, the New Taiwan Dollar on Friday rose against the greenback, gaining NT$0.178 to close at NT$31.602 as foreign investors continued to move funds into the country due to the US dollar’s weakness in international markets, dealers said. The NT dollar is up 1.2 percent from last week’s NT$31.993 against the US dollar.
Nomura’s Jordan Rochester said the greenback was still hobbled by disappointment that US president-elect Donald Trump had not touched on fiscal stimulus at a news conference on Wednesday last week and instead talked about divisive plans, such as building a wall on the border with Mexico.
“It opens up the possibility for the market that he could go down the more toxic route which is becoming more protective on trade,” Rochester said.
“Therefore it’s quite prudent for investors that the [US] dollar is a bit softer, especially against the yen which is the proxy here.”
However, some analysts think the US dollar could regain an upper hand as soon as more details of Trump’s stimulus become clear.
More US Federal Reserve members talked on Thursday last week about rate hikes and trimming the size of the central bank’s balance sheet.
“Medium term we should still see a stronger [US] dollar,” said James Binny, head of currency with State Street Global Advisors in London. “The positions were just so one-way and we needed a bit of a clearout to make some further progress.”
The week’s other main G10 loser, sterling, remained shaky on Friday as it was confirmed that British Prime Minister Theresa May would give a speech on Tuesday on Britain’s plan to leave the EU.
One-week implied sterling volatility — options contracts which allow traders to bet or hedge against near-term swings in the currency, spiked to their highest since October last week at 14.775.
It was the pound’s worst week against the euro since the start of October last year. It barely budged at ￡0.8725 per euro on Friday, but was down about 2 percent from where it started the week.
Against the US dollar it was a touch higher on the day at US$1.2180, but recorded its fifth weekly drop in the past six, having hit a three-month low of US$1.2038 on Wednesday last week.
Additional reporting by CNA
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