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Dollar holds near two-week high on strong US data

Dollar holds near two-week high on strong US data

Fri May 17 2019


The US currency also drew strength as its counterparts such as the euro and pound were dogged by bearish factors


The dollar held near a two-week high against its peers on Friday, supported by strong United States (US) economic data and a bounce in Treasury yields.


The dollar index versus a basket of six major currencies stood at 97.836 after reaching 97.882 on Thursday, its highest since May 3.


The green-back reached the two-week peak on robust US housing data and a weekly jobless claims report which pointed to sustained labour market strength in the world's biggest economy.


The US currency also drew strength as its counterparts such as the euro and pound were dogged by bearish factors.


“The euro is weighed down as the (euro) zone is saddled with weak economic fundamentals and Italian political concerns, while its all about Brexit for the pound,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.


Italy's right-wing League party will “tear apart” European Union (EU) rules which are “strangling” the country if it scores well in a May 23-26 European parliamentary election, Italian Deputy Prime Minister Matteo Salvini said on Thursday.


Salvini's challenge to EU fiscal rules has been a key source of the worry for the euro, which has fallen 0.5 per cent this week.


The safe-haven yen also stood to benefit from the woes in Europe and elsewhere.


“Fiscal risks related to Italy is a theme sure to captivate speculative market players. Any resulting 'risk off' could benefit the yen not only against the euro, but against the dollar as well,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.


The euro was steady at $1.1178 after falling to $1.1166 overnight, its lowest since May 6.


The common currency was up 0.15 per cent at 122.91 yen. It has retreated 0.5 per cent against the yen this week, during which it slid to 122.06, lowest since early January.


Britain faces a potentially disorderly exit from the European Union as Prime Minister Theresa May has struggled to keep her Brexit deal and her premiership.


The possibility of a chaotic departure from the EU has pushed the pound to a three-month trough of $1.2783 on Friday. Sterling last traded at $1.2787, having slumped 1.6 per cent this week.


The dollar extended overnight gains, adding 0.1 per cent to 109.955 yen.


Against the safe-haven yen the green-back fell to a 3-1/2-month low of 109.020 at the start of the week when a trade war between the United States and China intensified.


The Australian dollar was steady at $0.6893. It was in close reach of a four-and-half-month trough of $0.6886 plumbed on Thursday after soft domestic employment data heightened expectations for an interest rate cut by the Reserve Bank of Australia.


Elsewhere, the Turkish lira edged down 0.3 per cent to 6.0670 per dollar after the US on Thursday terminated Turkey's preferential trade treatment that allowed some exports to enter the country duty free. Softening the blow slightly, Washington halved its tariffs on Turkish steel imports to 25 per cent from 50 per cent.


The 10-year US Treasury note yielded 2.405 per cent, having pulled back from a near two-month low of 2.354 per cent brushed the previous day.


Source: Reuters

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