Sterling, euro slide as dollar marches higher
By Rae Wee and Kevin Buckland
SINGAPORE/TOKYO (Reuters) – The greenback gained floor towards the euro and sterling on Thursday after earlier hitting a 24-year peak towards the Japanese yen, as buyers positioned for increased U.S. rates of interest and remained involved in regards to the well being of European economies.
The euro slid 0.37% to simply maintain above parity towards the greenback at $1.10016, whereas the pound hit a contemporary two-and-a-half yr low of $1.15545 down round 0.5%, because the safe-haven greenback was supported by strikes away from riskier belongings.
The U.S. greenback index, which measures the dollar towards a basket of currencies, was up 0.34% at 109.09, not far off its two-decade excessive of 109.48 hit on Monday.
“Even after hitting contemporary information, USD energy has scope to increase considerably additional, boosted by the worldwide slowdown and the European vitality crunch specifically,” mentioned analysts at Generali Insurance coverage Asset Administration.
Manufacturing exercise throughout the euro zone shrank for a second month in August, in response to a survey, mirroring a droop in manufacturing facility exercise world wide, and whereas European vitality prices have softened barely this week, they continue to be at extremely elevated ranges.
The Japanese yen, earlier within the day, slid to as little as 139.69 yen per greenback, its softest since 1998, earlier than paring its losses. The greenback was final up 0.24% increased at 139.3 yen.
“The primary driver stays fee differentials between Japan and the U.S., and even immediately’s value motion simply follows the in a single day transfer increased in U.S. charges. We predict the trail forward goes to rely upon how U.S. charges behave,” mentioned Sosuke Nakamura, a strategist at JPMorgan in Tokyo.
Expectations for a 75-basis-point U.S. fee hike at subsequent month’s Federal Reserve assembly are rising on the again of strong financial knowledge, with Fed funds futures final pointing to round a 75% likelihood of such a rise.
This helped push the yield on benchmark 10 yr U.S. Treasuries to a two-month excessive of three.219% early on Tuesday. Japan’s coverage of yield curve management means its 10 yr authorities bond yield is simply 0.24%.
A senior finance ministry official mentioned on Thursday that Japan was watching foreign money strikes with a “excessive sense of urgency”.
The danger-sensitive Australian and New Zealand {dollars} additionally offered off as a part of the transfer in direction of protected haven belongings and hit their lowest ranges since July.
The Aussie was final down 0.47% at $0.68115, and the kiwi was 0.49% decrease at $0.6105.
Bitcoin which, too, trades in keeping with danger sentiment, was barely softer, buying and selling a fraction beneath $20,000.
(Reporting by Rae Wee in Singapore and Kevin Buckland in Tokyo; further reporting by the Hong Kong newsroom; Enhancing by Bradley Perrett and Bernadette Baum)
