Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Dollar totters as U.S. politics, Fed worries weigh

Published 12/25/2018, 11:47 PM
Updated 12/25/2018, 11:47 PM
© Reuters. U.S. dollar notes are seen in this picture illustration

By Vatsal Srivastava

SINGAPORE (Reuters) - The dollar was down against most of its peers on Wednesday, pressured by a cocktail of negative factors including heightened concerns over a partial U.S. government shutdown and tension between the White House and the Federal Reserve.

Fears of a U.S. and global economic slowdown have sent U.S. 10-year yields tumbling by around 25 basis points in December, adding to the increasing strain on the dollar and further darkening its outlook.

"Moderating U.S. growth and political tensions are negative for the dollar and we expect continued weakness," said Sim Moh Siong, currency strategist at Bank of Singapore.

"I expect the biggest winner of global risk-aversion to be the yen."

The dollar has struggled particularly against the yen, losing ground for eight straight sessions as a broad risk-off move in financial markets benefited the safe-haven Japanese currency. It tried to steady in early Asian trade on Wednesday, edging up 0.1 percent on the yen

Analysts at Mizuho Bank said the sharp decline in U.S. 10-year treasury yields (US10YT=RR) has dented the dollar's performance versus its peers. U.S. 10 year paper is currently yielding 2.73 percent, having fallen from 3 percent in early December.

The euro (EUR=) and the British pound

Over recent months the dollar has struggled to shake off a growing list of bearish factors, led most recently by speculation over the outlook for U.S. interest rates, falling bond yields and the plunge in oil prices.

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

Last week, the Federal Reserve raised rates for the fourth time this year, and largely kept to its plans to hike rates next year despite heightened economic risks.

That prompted U.S. President Donald Trump to step up his criticism of Fed Chairman Jerome Powell, with the public tussle between the White House and the Fed rattling investors.

Trump blasted the Fed on Monday, describing it as the "only problem" for the U.S. economy.

The partial U.S. government shutdown has also added to investor worries about the growth outlook. The U.S. Senate has been unable to break an impasse over Trump's demand for more funds for a wall on the border with Mexico, and a senior official said the shutdown could continue until Jan. 3.

Elsewhere, commodity currencies such as the Canadian dollar

Latest comments

mexico wall problem
long gold
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.