FX Roundup: Dollar retreats from previous highs; euro falters
The dollar retreated to lower levels on Wednesday, shedding the previous session’s gains against a basket of global currencies, while the euro also fell against selected currency crosses.
At 1345 BST, the pound sterling was up 0.15% against the greenback, changing hands at $1.5174. Concurrently, the dollar also lost ground against selected emerging market and commodities-linked currencies, breaking a sequence of five sessions marked by upticks against major Asian and Latin American currency crosses.
The US currency fell against the Singapore dollar (down 0.31%), Korean won (down 1.39%), Thai baht (down 0.17%), Taiwan dollar (down 0.43%), Indonesian rupiah (down 0.26%) and Malaysian ringgit (down 1.39%) for a fourth successive session.
The greenback also fell 0.13% against the Canadian dollar changing hands at CAD$1.3405, and retreated against other prominent commodities-linked currencies such as the Brazilian Real (down 0.83%).
However, the dollar traded 0.30% and 0.28% higher against the yen and Swiss franc, changing hands at JPY120.10 and CHF0.9745 respectively. Meanwhile, the euro faltered slipping 0.61% against the pound and 0.45% against the dollar, exchanging at $1.1198 and £0.7380 respectively.
Jane Foley, senior FX strategist at Rabobank, said: “The emerging market economies that have been hardest hit this year have been commodity producers. The depressed position of commodities is closely entwined with slowing growth in China – the world’s largest consumer of commodities.
“Although it is likely that investors will be giving commodity producing EM currencies a wide berth for some months to come, there is still opportunity for the euro to fall against less risky currencies in the coming months. We also see the potential for the USD to move higher versus the EUR.”
Kit Juckes, head of forex at Societe Generale, noted the euro has fallen by over 10% against the dollar over the last year. “And yet, despite that, Eurozone CPI probably fell over the same period. How does that work? Wishing for a rebound in inflation in Europe as ‘base effects' support the year-over-year comparison seem pretty hopeful given that the currency has stopped falling and has its own base effect.”
Elsewhere, early afternoon European trading saw the Australian dollar recoup losses against its US counterpart, clawing back another 0.52% following Tuesday's gains to change hands at US$0.7021. Concurrently, the New Zealand dollar also rose 0.36% against the greenback changing hands at US$0.6369.