Dollar regains footing, Kiwi falls on RBNZ comments 

currencies
  • Dollar broadly firm, US housing data beats expectations

  • Euro hurt by concerns over Greece

  • BOE minutes less dovish than expected, wrong footing markets

  • Swiss franc under renewed pressure

The U.S. dollar held firm on Thursday after strong U.S. housing data helped to lift U.S. bond yields while the New Zealand dollar fell more than one percent following dovish central bank comments.

The dollar’s index against a basket of six major currencies gained 0.3 percent to 98.270 , extending its recovery into the fourth day.

The dollar has been a currency of choice for many investors so far this year as the U.S. Federal Reserve is expected to raise interest rates in coming months, enhancing the yield attraction of the dollar.

U.S. homesales data published on Wednesday was much stronger than expected, helping to ease concerns about some soft U.S. data in recent weeks.

The euro resumed its descent after an upside probe failed to break new ground, dipping 0.3 percent to $1.0693, edging closer to Tuesday’s low of $1.0660.

Undermining the common currency are concerns about cash-strapped Greece, which has yet to secure a deal with its lenders to unlock fresh funding. A breakthrough remained a distant prospect.

“There may be some small progresses here and there in the negotiation but on the whole it looks as if the country is heading for a default,” said Koji Fukaya, CEO of FPG Securities.

The New Zealand dollar fell about 1.0 percent to $0.7591 , after Reserve Bank of New Zealand Assistant Governor John McDermott said on Thursday the bank would not considering raising interest rates until it saw evidence of a substantial pick up in inflation,

He added that weakening demand and lower price risks may warrant lower rates.

The dollar stayed firm against the yen, moving above 120.00 yen for the first time in over a week.

The Swiss franc was targeted by sellers after the Swiss National Bank said on Wednesday it was reducing considerably the number of institutions exempt from negative rates on cash deposits held at the central bank.

The dollar rose to 0.9700 franc while the euro rallied more than 1 percent to 1.0415 Swiss francs, reaching its highest in two weeks.

In contrast, sterling stood at its highest in over a month early on Thursday, having outperformed its peers after the latest set of policy minutes from the Bank of England was less dovish than expected.

The pound climbed as far as $1.5080, while the euro slid to 71.20 pence, reaching levels not seen since mid-March. Sterling has since eased back to $1.5028, while the common currency remained pinned near the session low.

BOE policymakers appeared more focused on the prospect for higher inflation in the minutes, sparking a rally in sterling and a vicious selloff in gilts.

The pound’s performance on Wednesday was its best in about a month and could signal the start of more sustained gains, analysts said.

The Australian dollar was little changed around 77.50 cents , showing little reaction to a survey showing China’s factory activity contracted at its fastest pace in a year in April.

Source: Reuters – FOREX-Dollar regains footing, Kiwi falls on RBNZ comments

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