LONDON – The dollar rose above a one-week low versus key peers on Friday, respite after its biggest overnight fall in nearly a month, as questions remained about the fortunes of property developer China Evergrande Group.
The yen fell to its weakest level since mid-August as Treasury yields hit their highest level since early July.
The dollar index, which measures the greenback against a basket of six rivals, rose 0.08 per cent to 93.175 after falling 0.36 per cent on Thursday and touching its lowest level since September 17 at 92.977. That erased gains for the week, and set the index for a 0.09 percent drop.
The safe-haven dollar hurt after Beijing poured fresh cash into the financial system on Thursday, when Evergrande announced it would make interest payments on an onshore bond.
However, some holders of its offshore bonds said they had not received coupon payments by the Thursday deadline. More dollar bond interest is due next week.
The dollar rose 0.16 per cent to 110.57 yen for the first time since August 11, as the benchmark US Treasury yield climbed to a high of 1.452 per cent in Tokyo, a level not seen since July 2. The yield last traded at 1.4320 per cent.
Hawkish comments from the Bank of England (BoE) pushed yields globally on Thursday, a day after the US Federal Reserve said it could start reducing its monthly bond purchases as early as November, and interest rates May grow faster than the next. Year.
The BoE said two of its policymakers had voted to end pandemic-era government bond-buying early and markets raised their hopes for an interest rate hike in March.
“The fate of Evergrande remains uncertain, but markets are now less concerned about any potential systemic impact, leaving room for riskier assets,” ING’s Francesco Pesol and Chris Turner said in a morning note to clients. “
“Better sentiment has weighed on the dollar, which is also discounting the reluctance of the markets to align with the Fed’s dot plot.”
Sterling was little changed at $1.3717 after rising to $1.3750 overnight for the first time since September 20.
The euro was also mostly flat at $1.1738, after recovering from a one-month low of $1.16835 on Thursday.
The risk-sensitive Australian dollar was down 0.2 per cent at $0.7280 after touching a one-week high of $0.73165.
Westpac sees the dollar index up slightly higher towards the end of the year, but remains in the 92.0–93.5 range in the near term.
Strategists at Westpac wrote in a report, “not to mention the ongoing uncertainty surrounding Evergrande, going ahead with the Fed’s clear taper signal and rate lift-off plans.”
Meanwhile, National Australia Bank said a sharp decline in dollar sentiment would be required for the dollar index to hit its year-end target of 89.6, “and there are no clear short-term triggers for this”, strategists said in a statement. In the research note.
Several Fed officials are due to speak on Friday, including Chair Jerome Powell, who delivers opening remarks at the Fed Licensing event.
by Ritwik Carvalho
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This News Originally From – The Epoch Times
