FX Roundup: Dollar in mixed trading, pound recovers

The pound sterling clawed back recent losses on Monday, while the dollar saw mixed trading with US markets closed for the Martin Luther King Day holiday.

At 1418 GMT, the pound was up 0.13% versus the dollar changing hands at $1.4276, improving intraday but still trading at five-and-half-year lows on ‘Brexit’ risk trades and fears of a cooling British economy.

Meanwhile, the dollar was up 0.29% against the yen changing hands at JPY117.32, and the euro fell 0.18% against the greenback exchanging at $1.0896. Continuing with major crosses, the dollar also rose 0.38% against the Swiss franc changing hands at CHF1.0050.

Kit Juckes, head of forex at Societe Generale, said, “With the US market closed for Martin Luther King Day, and a limited economic calendar over the rest of the week, we'll probably ponder over issues such as the lifting of Iranian sanctions, oil glut and the Chinese authorities' decision to impose a reserve requirement on offshore renminbi deposits over the coming days.

“Maybe there's room for some short-covering in risk assets and currencies. But there isn't much to point to an imminent change in the basic direction of travel. Stay long USD and JPY, stay short GBP, AUD and NZD G10”

Meanwhile, major commodity linked currencies recovered as oil futures posted marginal gains during late European trading, holding positions just shy of $30 per barrel levels.

The greenback fell 0.19% versus the Canadian dollar changing hands at $1.4514, while the Australian dollar rose 0.19% against its US counterpart exchanging at US$0.6877. However, the New Zealand dollar fell 0.28% exchanging at US$0.6456.

Simon Smith, chief economist at FXPro, said, “Sterling has managed a modest bounce at the start of the session to the 1.43 level, but remains the weakest performer apart from the dollar bloc. But it is the commodity currencies that have suffered the most year to date, the Aussie and kiwi in particular, with the yen pushing ahead as its safe haven status comes to the fore.”

Finally, in Latin America, the dollar headed lower against major regional crosses, including the Colombian (down 0.04%), Mexican (down 0.05%) and Chilean (down 0.09%) pesos, and the Brazilian real (down 0.056%).