Dollar firm as US data quiets recession worries
Shafaq News/The dollar hovered not far from a two-week high to the yen on Friday after itsbiggest one-day gain against major peers in four weeks as firm U.S. economicdata all but eliminated fears of a recession.
Thegreenback had been given an extra boost against the Japanese currency thanks toa surge in Treasury yields on Thursday as traders pared back bets the FederalReserve would be forced into aggressive easing next month.
Risk-sensitivecurrencies like sterling were firm as the improved economic outlook spurred arally in equities.
The dollarindex , which measures the greenback against six major peers including the yen,sterling and euro, eased 0.12% to 102.92 as of 0513 GMT, but that followed a0.41% overnight rally, the most since July 18.
The dollarretreated 0.24% slightly to 148.935 yen , but was still close to Thursday'shigh of 149.40, a level last seen on Aug. 2. The 10-year Treasury yield edgeddown a little over 2 basis points to 3.9035% in Asian hours.
On Thursday,the Commerce Department said retail sales rose 1.0% last month, toppingforecasts for a 0.3% gain. Separate figures showed 227,000 Americans filed forunemployment benefits last week, fewer than the 235,000 expected.
Traders areconvinced the Fed will slash rates on Sept. 18, but had debated the size of thereduction. Odds currently stand at 25% for a super-sized 50 basis-point cut,down from 36% a day earlier, according to the CME Group's FedWatch Tool.
Surprisinglysoft monthly payrolls data at the start of the month had pushed the odds of thelarger cut to 71%.
"Growthis in a better spot and the consensus is again subscribing to the 'softlanding' thesis," said Chris Weston, head of research at Pepperstone,pointing to 150 yen per dollar as the next level to watch for the currencypair.
"Whilethere are always risks, there is little in the data flow now to really derailsentiment in the immediate near-term."
The dollarsank to as low as 141.675 yen on Aug. 5 for the first time since the start ofthe year as the Bank of Japan's surprisingly hawkish stance on further interestrate hikes combined with the flare-up in U.S. recession worries to spark anaggressive unwinding of yen-financed carry trades.
Some calmwas restored after influential BOJ deputy governor Shinichi Uchida said thecentral bank wouldn't hike rates when markets are volatile.
Adding tosigns that traders have started rebuilding those positions, official data onFriday showed Japanese investors ploughed the most money into long-termoverseas bonds in 12 weeks in the week to Aug. 10, while foreigners net boughtshort-term Japanese debt after eight straight weeks of net sales. Overseasinvestors also snapped up about $3.5 billion in Japanese shares in the period,reversing three consecutive weeks of net selling.
Meanwhile,sterling rose 0.2% to $1.2879, building on its overnight 0.21% advance. TheBritish currency got an additional boost from solid GDP figures on Thursday.
The euroadded 0.1% to $1.098225, following a 0.36% slide in the previous session.
Therisk-sensitive Australian dollar gained 0.33% to $0.6632, having advanced 0.2%the previous day after data showed a much-bigger-than-expected surge in jobs.
NewZealand's dollar climbed 0.6% to $0.60205.
(Reuters)
