Connect with us

Business

Dollar plunges further from 3-week high, Pounds also

Published

on

Spread The News

 

The U.S. dollar eased 0.2 percent against the yen to 111.15, pulling away from a three-week high of 111.79 yen reached on Tuesday.

The dollar index, which measures the greenback against a basket of six major currencies, was marginally weaker at 97.504, having retreated from a one-month high of 97.871 set on Tuesday.

The U.S. 10-year bond yield is now 209 basis points above its Japanese counterpart, compared to levels around 237 basis points seen in the early part of May.

Similarly, the British Pound Sterling traded slightly below $1.27, investors treading water after a split at the Bank of England over monetary policy added further uncertainty to the outlook for Britain’s economy as it leaves the European Union.

Sterling weakened almost 1 percent after Carney’s comments, but was bumped higher after Haldane spoke on Wednesday, recovering to as much as $1.2704. It traded 0.1 percent lower on the day at $1.2661 and 88.16 pence per euro on Thursday.

Barely a week after three members of the central bank’s eight-strong rate-setting committee voted to hike record low interest rates, two of the Bank’s top officials gave opposing signals on the Bank’s stance towards interest rates.

Governor Mark Carney in a speech on Tuesday said it was not the right time to raise interest rates, while the Bank’s chief economist Andy Haldane separately said he expected to vote for a rate rise later this year.

“For me the reversal yesterday on the Haldane comments looks overdone,” said Jeremy Stretch, currency strategist with CIBC World Markets in London.

“I wouldn’t be surprised if we were to see sterling drifting lower once again even if Kristin Forbes leaves with another parting shot at the MPC (Monetary Policy Committee) in terms of not getting behind the curve.”

ALSO SEE: Investors rekindle interest in stocks as Naira strengthens

Outgoing MPC member Kristin Forbes, long an anti-inflation hawk on the BoE committee, is due to speak at London Business School later in the day.

Advertisement

Investors were also following political developments, with Prime Minister Theresa May’s due to present to EU leaders her approach to giving guarantees to EU citizens over their rights in Britain.

“Sterling has had its Haldane-inspired lift, and probably has little further upside with the main focus on politics,” Societe Generale strategist Kit Juckes said in a note.

Trending