Breaking News
0

Dollar weakens, yen at October highs after U.S. stocks slide

ForexOct 11, 2018 12:32AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Illustration photo of Japan Yen and U.S. Dollar notes

By Vatsal Srivastava

(Reuters) - The U.S. dollar, usually seen as a safe haven in turbulent times, surprised some currency strategists on Thursday by losing ground after spooked investors drove U.S. stocks to their worst fall in nearly eight months.

The VIX (VIX), Wall Street's "fear index" measuring the stock market's expectation of volatility, rose by 44 percent to 22.96 on Thursday, its highest level since April.

The dollar index (DXY), a gauge of its value against six major currencies, fell 0.31 percent to 95.21 on Thursday, after hitting a high of 95.79 in the previous session.

"In an environment where people are concerned about rising volatility, the dollar tends to do well - especially versus higher-risk currencies such as the Aussie and Canadian dollar," said Stuart Ritson, head of Asian rates & foreign exchange at Aviva (LON:AV) Investors.

"There seems to be a disconnect and there is no obvious explanation for why the dollar did not fare better on a risk-off day," said Ray Attrill, head of foreign exchange strategy at NAB.

" The yen continues to show its colors as the markets favorite risk haven proxy," added Attrill.

The safe-haven yen strengthened to 112.13 against the dollar, its highest level this month, taking heart from risk aversion in the wake of warnings from the IMF over global growth and financial stability.

"There was a clear bid for current-account surplus countries with both the JPY and EUR finding support," ANZ said in a note.

the U.S. Federal Reserve's apparent determination to raise interest rates over the next 12 months has driven up U.S. Treasury yields, which have been further bolstered by strong economic data.

"We expect rising inflation to keep the Fed hiking interest rates at its current once-a-quarter pace until the middle of 2019," Capital Economics said in a note.

Expectations of hawkish rate rises may have been at work on Wednesday when sellers sent the Nasdaq (NDX) to close at 7044.49, its lowest level since early July.

The S&P 500 (SPX) and Dow Jones Industrial Average (DJI) weren't too far behind, both falling more than 3 percent.

Benchmark 10-year yields (US10YT=RR) cooled off from a seven-year high of 3.261 percent hit on Tuesday to 3.1516 percent.

The euro (EUR=) rose 0.35 percent to 1.1566 on Thursday after hitting a low of 1.1477 in the previous session.

EU Brexit negotiator Michel Barnier said on Wednesday the parties had agreed on much of the withdrawal agreement ahead of a summit of the bloc's 28 national leaders next week.

But the euro's gains are likely to be limited with markets worried about the sustainability of Italy's public finances, despite Italian Economy Minister Giovanni Tria stating that the government would do everything in its power to regain the confidence of financial markets.

Sterling traded at $1.3228, its highest in a week, as investors bet on an orderly British departure from the EU in March.

The pound has gained more than 2 percent versus the dollar over the last five trading sessions.

The Canadian Dollar was changing hands at 1.3048, not far off its October low of 1.3069 versus the dollar hit on Wednesday.

The Australian dollar , often viewed as a gauge of global risk appetite, traded at 0.7078, up 0.25 percent on Thursday.

The New Zealand's dollar traded at 0.6476, above its multiyear low of 0.6422 seen on Monday.

Gold traded relatively flat at $1,193 below the psychological $1,200 level.

(Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh)

Dollar weakens, yen at October highs after U.S. stocks slide
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email