Safe-haven dollar eases after Wednesday’s jump, but risk sentiment remains fragile

US one dollar banknotes are seen in this illustration taken February 8, 2021. REUTERS/Dado Ruvic/Illustration//File Photo

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TOKYO, May 19 (Reuters) – Safe-haven currencies including the dollar eased on Thursday, pausing after big gains in the previous session as Wall Street stocks tumbled amid growing concerns over the tightening aggressive from the Federal Reserve and other global central banks. could stifle growth.

The dollar index, which tracks the greenback against six major peers, edged down 0.05% to 103.74, after a 0.55% jump overnight that ended a streak three days of defeats.

The yen slipped, with the dollar adding 0.21% to 128.495 yen after falling 0.86% on Wednesday.

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The Swiss franc continued to strengthen, with the dollar losing another 0.13% to 0.9869 francs, after falling 0.6%.

The benchmark 10-year US Treasury yield held steady around 2.89% in Tokyo after falling 3.015% in the previous session.

Despite the pause in the safe-haven rally, sentiment remained fragile with Asian stocks (.MIAP00000PUS) falling and US futures pointing lower, a day after the S&P 500 fell 4% (. SPX) and a 5% drop for the Nasdaq (.NDX).

Weak U.S. housing data on Wednesday heightened worries about the downturn, and Fed Chairman Jerome Powell had stepped up hawkish rhetoric the previous day by saying the U.S. monetary authority would push interest rates as high as needed to stem a spike in inflation that he said threatened the foundation of the economy. Read more

Powell’s position “makes a ‘soft landing’ difficult for the US economy given the long lags between changes in monetary policy and changes in inflation,” wrote Joseph Capurso, currency strategist at the Commonwealth Bank of Australia in Sydney, in a client. Remark. “The darkening outlook for the US economy supports the USD and safe-haven currencies.

The euro recovered ground, adding 0.25% to $1.0489 after Wednesday’s 0.84% ​​drop.

The Aussie rose 0.14% to $0.6965 – shaking off a weaker-than-expected rise in jobs for the past month – but the currency had fallen 1.05% on Wednesday. Read more

The pound remained under pressure, trading thin at $1.2343 after falling 1.2% overnight as UK inflation soared to a 40-year high raising concerns about a marked economic slowdown. Read more

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Reporting by Kevin Buckland

Our standards: The Thomson Reuters Trust Principles.

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