Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Forex - U.S. Dollar Steady, Yen Weakens as Risk Appetite Improves

Published 01/23/2019, 03:13 AM
Updated 01/23/2019, 03:13 AM
© Reuters.

Investing.com - The U.S. dollar was holding steady against a basket of its rivals on Wednesday and the yen was broadly lower as risk sentiment improved, but concerns over slowing global growth and U.S.-China trade tensions looked likely to keep gains in riskier assets in check.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was at 95.97 by 03:10 AM ET (08:10 AM GMT), little changed for the day.

The yen was weaker against the greenback, with USD/JPY advancing 0.26% to 109.64. It was also lower against the euro, with EUR/JPY climbing 0.32% to 124.61.

Overnight, the Bank of Japan kept monetary policy unchanged and trimmed its inflation forecast. Data showing a larger-than-expected drop in December exports earlier in the day underlined the need for continued support for the trade-reliant economy.

The Australian dollar was slightly higher, with AUD/USD rising 0.18% to 0.7135.

The New Zealand dollar was also higher, with NZD/USD gaining 0.5% to trade at 0.6780 after overnight data showing that inflation edged higher in the fourth quarter was seen as reducing the likelihood of interest rate cuts.

Currency markets have been whipsawed over recent weeks amid concerns over a range of issues from Brexit to slowing global growth and the outlook for major central banks.

"Nervousness around global growth and trade tensions is certainly a factor driving the markets right now," said Michael McCarthy, chief markets strategist at CMC Markets.

"Markets have also seen a spectacular run since late December..so the recent correction in equities can also be due to positioning."

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

On Monday, the International Monetary Fund cut its 2019 and 2020 global growth forecasts, citing a bigger-than-expected slowdown in China and the euro zone, and said failure to resolve trade tensions could further destabilize a slowing global economy.

Growth in China last year was the slowest since 1990 and is set to weaken further this year before stimulus measures start to kick in.

Investors are hoping for a breakthrough in U.S.-China trade talks, with the trade war between the world's two largest economies spooking markets.

A report by the Financial Times that the U.S. had rejected China's offer for preparatory trade talks dampened risk sentiment overnight, though it was later denied by a White House adviser.

The euro and the pound were both flat against the U.S. currency, with EUR/USD at 1.1356 and GBP/USD changing hands at 1.2962.

Sterling gained 0.5% against the greenback on Tuesday after data showing that the U.K. labor market remained strong despite an economic slowdown ahead of the looming deadline for Brexit on March 29.

Sterling is sitting close to its highs last seen in mid-November, a sign that traders expect Britain to avoid a chaotic exit from the European Union.

Since Prime Minister Theresa May’s divorce deal with the EU was rejected by lawmakers last week in the biggest defeat in modern British history, lawmakers have been trying to plot a course out of the crisis, yet no option has the majority support of parliament.

"The market is now completely discounting the prospect of a hard Brexit, though the political risk still remains in play and volatility is sure to ratchet higher if no clear path is visible to the market," said Kathy Lien, managing director of currency strategy at BK Asset Management,

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

-- Reuters contributed to this report.

Latest comments

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.