FX Roundup: Dollar rally seen losing steam

The dollar traded lower against a basket of global currencies on Wednesday, ending five successive sessions in the ascendancy, while the euro continued to slip lower against the greenback.

At 1613 GMT, the dollar was down 0.20% against the yen exchanging at JPY122.90 having retreated from Tuesday's highs. Concurrently, the euro fell 0.05% against the greenback to remain around a seven-month low level of $1.0723.

However, the pound rose 0.47% against the dollar to exchange at $1.5190. The dollar also fell 0.19% against the Swiss franc exchanging at CHF1.0048.

The Canadian dollar was broadly flat against its US counterpart in the face of lacklustre economic forecasts by the new government in Ottawa and lower trading levels on account of the Veterans Day holiday stateside.

Jane Foley, senior FX strategist at Rabobank, said, “Although the Canadian economy is still adjusting to the blow stemming from the energy sector, the two interest rates cuts announced this year coupled with the soft tone of the CAD have softened monetary conditions significantly.

“The weaker CAD has led to an increased in underlying inflation. While this should be largely transitory this supports our view that Bank of Canada rates are set to remain on hold for the time being. That said, with the US Federal Reserve looking likely to start its tightening cycle next month we continue to expect USD/CAD to edge higher towards 1.34 on a six month view."

Elsewhere, the New Zealand dollar continued to reverse recent declines against its US counterpart, rising 0.40% to change hands at $0.6555, while the Australian dollar was changing hands at US$0.7053, up 0.30%.

In Latin America, the dollar traded higher against the Colombian peso (up 0.04%) and Brazilian real (up 0.66%), but fell against the Chilean peso (down 0.18%) and Mexican peso (down 0.19%).