Dollar edges lower versus yen before Yellen testimony; sterling off lows

A U.S. five dollar note is seen in this picture illustration June 2, 2017. REUTERS/Thomas White/Illustration

By Saikat Chatterjee

LONDON (Reuters) – The U.S. dollar fell against the yen and languished at 14-month lows against the euro on Wednesday ahead of Federal Reserve Chair Janet Yellen’s appearance in Congress to give testimony on monetary policy.

As investors sought to take profits after a recent dollar rally on the back of a broadly mixed session for risky assets, the greenback’s rise was also halted thanks to a softening of U.S. Treasury yields this week.

The dollar edged 0.4 percent lower against the yen to 113.43 <JPY=EBS> in early trades after rising more than 5 percent over the last month. It was trading at 1.14565 against the euro, its lowest level since early May. <EUR=EBS>

“The Yellen testimony remains the key event risk in today’s session but we remain optimistic about the dollar’s outlook and putting on a long position against sterling is the best way to execute that view,” said Adam Cole, head of FX strategy at RBC Capital Markets in London.

Yellen will give her semi-annual monetary policy testimony before Congress later on Wednesday and on Thursday, and investors will be parsing it for clues on when the Fed will start reducing its massive balance sheet.

Strategists at Brown Brothers Harriman don’t expect Yellen to break new ground in her testimony.

The Fed raised rates last month to a range of 1 percent to 1.25 percent and market expectations are roughly of a 50 percent probability that interest rates will rise again before the end of the year, according to the CME’s Fed watch data.


While there is a 50 percent probability for the Bank of England to raise interest rates too before the end of the year, markets are expecting the central bank to strike a dovish stance after recent soft data and comments from policymakers.

In an interview for a Scottish newspaper, the Press and Journal, published on Wednesday, Bank of England Deputy Governor Ben Broadbent said that while there was reason to see the bank moving towards higher rates, there were “a lot of imponderables”.

His comments pushed sterling to a two-week low against the dollar <GBD=D3> and to its lowest in eight months against the euro in early trading on Wednesday.

While subsequent wages data pulled sterling from the day’s lows, the outlook remained wary.

In other currencies, the Canadian dollar <CAD=> was slightly higher against its U.S. counterpart as investors awaited a Bank of Canada interest rate decision later on Wednesday.

(Editing by Gareth Jones)

Dollar slips, yen gains, after Trump fires FBI chief

Dollar banknotes are seen in this picture illustration taken April 28, 2017. REUTERS/Dado Ruvic/Illustration

By Jemima Kelly

LONDON (Reuters) – The dollar fell and the perceived safe-haven yen gained on Wednesday, after U.S. President Donald Trump abruptly fired FBI Director James Comey in a move that shocked Washington and dampened some of this week’s strong risk appetite.

Rekindled fears that North Korea could be gearing up for another weapons test also underpinned the yen, which had sunk to an eight-week low the previous day as investors’ appetite for riskier currencies increased on the back of a weekend French election result that eased euro break-up fears.

The dollar, which had strengthened to as much as 114.325 yen on Tuesday <JPY=>, slipped back to 113.87 yen.

Trump said he had sacked FBI Director James Comey – who had been leading an investigation into the Trump 2016 presidential campaign’s possible collusion with Russia to influence the election outcome – over his handling of an email scandal involving presidential nominee Hillary Clinton.

But the move ignited a political firestorm, raising suspicions among Democrats and others that the White House was trying to blunt the FBI probe involving Russia.

The dollar slipped 0.2 percent against a broad index <.DXY>.

“There’s not much risk sentiment – that’s to some extent the main driver today, mainly with respect to geopolitical questions,” said Credit Agricole currency strategist Valentin Marinov in London.

Comments from European Central Bank President Mario Draghi failed to have any clear impact on the euro, which was flat at $1.0878 <EUR=>. Draghi said it was too early for the ECB to declare victory in its quest to boost euro zone inflation.

“Draghi is repeating the same message that he made at the last ECB press conference – there are no big surprises. He’s defending the ECB’s dovish policy stance,” said Marinov.

The euro had risen to a six-month high above $1.10 on Monday, after Emmanuel Macron defeated the anti-EU Marine Le Pen in France’s presidential run-off, as worries over European political risk faded and focus returned to central bank policy.

The Swiss franc, another safe-haven currency, fell to its lowest in seven months on Tuesday and stayed close to that at 1.09575 francs per euro, flat on the day <EURCHF=>.

Commerzbank currency strategist Esther Reichelt, in Frankfurt, though, said risk appetite could only drive the currency market so far before new drivers were needed.

“Dollar strength could materialize more, given the more benevolent risk environment, but that can only move the market for so long – you always need new impetus,” she said.

U.S. political uncertainty has tended to weigh on the dollar in recent months, on the view that a divided Congress could derail Trump’s promised tax reform and stimulus programme.

(Reporting by Jemima Kelly, editing by Larry King)

Stocks skid, safe-haven assets jump as U.S. missiles strike Syria

A woman monitors stock market prices inside a brokerage in New Taipei city, Taiwan

By Wayne Cole

SYDNEY (Reuters) – Safe-haven bonds and the yen jumped in Asia on Friday, while stocks fell after the United States launched cruise missiles against an air base in Syria, raising the risk of confrontation with Syrian backers Russia and Iran.

The U.S. dollar dropped three-quarters of a yen in currency markets, while sovereign bonds, gold and oil prices rallied hard.

MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.7 percent in short order, and S&amp;P 500 futures lost 0.5 percent in an unusually sharp move for Asian hours. Japan’s Nikkei was stripped of its early gains to slip 0.1 percent.

U.S. President Donald Trump ordered the strikes against a Syrian air base controlled by President Bashar al-Assad’s forces in response to a deadly chemical attack in a rebel-held area, a U.S. official said.

Facing his biggest foreign policy crisis since taking office in January, Trump took the toughest direct U.S. action yet in Syria’s six-year-old civil war.

Investors had already been on edge as Trump met Chinese leader Xi Jinping for talks over flashpoints such as North Korea and China’s huge trade surplus with the United States.

“While President Trump had flagged a response to this week’s chemical attack in Syria, the swiftness of the response and the willingness to take action halfway through the Trump-Xi meeting caught markets a little off-guard,” said Sean Callow, senior currency strategist at Westpac in Sydney.

“There should be limited market follow-through, however, with no indication at this stage that this is the start of a broad-based, sustained U.S. military campaign.”

It was not yet clear if this strike would be the only one, though Secretary of State Rex Tillerson did say the attack was  “proportionate”.

The yen, a favored haven in times of stress due to Japan’s position as the world’s largest creditor nation, climbed across the board. The dollar fell to 110.30 from 110.95 just before news of the attacks hit dealing screens.

The dollar was otherwise unscathed, however, as it benefited from flows into safe-haven U.S. Treasuries. Against a basket of currencies it was barely lower, while the euro held steady at $1.0649.

Yields on 10-year Treasury debt fell five basis points to 2.29 percent, breaking a significant chart barrier at 2.30 percent for the first time this year.

Spot gold prices jumped 1.2 percent to $1,266.01 an ounce and touched their highest since Nov. 10.

“Clearly this raises the stakes, and we expect to see gold prices continuing to push higher in the short term, at least until there is some clarity around whether this is a one-off or develops into something more,” ANZ analyst Daniel Hynes said.

Oil also caught a bid on concerns the military intervention could affect supplies from the Middle East.

U.S. crude jumped 93 cents to $52.63 a barrel, the highest in a month, while Brent added 90 cents to $55.79.

(Reporting by Nichola Saminather; Additional reporting by Herbert Lash; Editing by Shri Navaratnam and Will Waterman)

Dollar loses more ground; yen up on safe-haven demand

FILE PHOTO: U.S. dollar notes are seen in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration/File Photo

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The dollar dipped to a near-four month low against the Japanese yen on Tuesday as concerns about how quickly the Trump administration can implement pro-growth policies pushed stocks lower and kindled safe-haven demand for the Japanese currency.

The dollar fell 0.86 percent to 111.58 yen <JPY=>, its lowest since Nov. 28. The dollar index, which measures the greenback against a basket of six major currencies, dipped below the 100 level for the first time since Feb. 7.

“The current and ongoing breakdown in the U.S. dollar is representative, driving some short-term and nascent deleveraging of legacy ‘reflation’ trades, with DXY through the psychological 100 level,” said Charlie McElligott, managing director and head of U.S. cross-asset strategy at RBC Capital Markets.

The S&P 500 <.SPX> S&P 500 dropped more than 1 percent for the first time since October. U.S. Treasury yields fell to three-week lows. [nL2N1GY1E5]

“There is certainly some interplay between all these factors that is supporting the yen,” said Erik Nelson, a currency analyst at Wells Fargo in New York.

The greenback has been under pressure after comments from the U.S. Federal Reserve last week disappointed dollar bulls.

“It’s probably going to take some sort of meaningful change in expectations around monetary or fiscal policy to revive the dollar and set it back on a strengthening trend,” Nelson said.

The upcoming French elections helped the euro and weighed on the dollar after centrist Emmanuel Macron’s performance in a televised debate boosted a view that he would win the presidential race over the far-right’s Marine Le Pen.

Bullish bets on the dollar spurred by Donald Trump’s U.S. presidential win and his pledge on tax cuts, deregulation and infrastructure spending last November have been fully unwound, Bank of America Merrill Lynch currency strategist Myria Kyriacou said in a note.

The euro rose to its highest level since Feb. 2, and was last up 0.69 percent to $1.0812.

The prospect of anti-European Union, far-right candidate Le Pen delivering a surprise election win has rattled French bond markets this year and is a key source of political uncertainty for the euro.

“Any news between now and the French election next month that suggests fading risk of a Le Pen victory would probably be supportive of the euro,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Sterling jumped 1.1 percent to its highest level in three weeks, after data showed British inflation in February above the Bank of England’s 2 percent target for the first time since the end of 2013. This was seen as boosting chances for a rate hike from the BoE.

(Reporting by Saqib Iqbal Ahmed; Editing by Leslie Adler and Lisa Shumaker)

Dollar falls against yen on risk reduction; sterling sinks

the dollar bill

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar slumped against the safe-haven yen on Monday on investors’ reduced appetite for risk, while sterling sank to more than two-month lows on talk that Britain would drastically rework trade ties with the European Union after Brexit.

A fall in U.S. Treasury yields and U.S. stocks drove the dollar down as much as 0.6 percent against the yen to a session low of 116.16 yen JPY=. The dollar remained within recent trading ranges and did not test Friday’s more than three-week low of 115.04 yen.

Analysts said there was no fundamental catalyst for the dollar’s decline against the yen, with traders probably reacting to lower U.S. yields and equities.

“There’s an optical relationship with the fact that stocks are lower,” said Shahab Jalinoos, global head of FX strategy at Credit Suisse in New York.

The dollar was last down 0.4 percent at 116.43 yen. It dipped modestly against the euro and Swiss franc, leading the dollar index .DXY, which measures the greenback against a basket of six major currencies, to stand 0.08 percent lower at 102.150.

The pound slid more than 1 percent against both the dollar GBP=D4 and the euro EURGBP=R after weekend comments from British Prime Minister Theresa May that she was not interested in keeping “bits of membership” of the European Union.

Sterling slid as low as $1.2125, its weakest against the dollar since the end of October. It fell about 1.2 percent against the euro, hitting 86.91 pence per euro, the lowest since mid-November.

“Anything that suggests a hard Brexit is more likely … is very damaging to UK growth prospects,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp in New York.

Against the dollar, sterling was last down 1 percent at $1.2156, while the euro EUR= was up 0.3 percent at 1.0562. The dollar was down 0.17 percent against the franc at 1.0162 francs CHF=.

On Wall Street, the benchmark S&P 500 stock index .SPX was down 0.13 percent, while benchmark 10-year U.S. Treasury yields US10YT=RR fell nearly four basis points on the day to 2.383 percent.

(Reporting by Sam Forgione; Additional reporting by Marc Jones in London; Editing by Lisa Von Ahn))

Dollar steadies as pre-Fed nerves dominate

Bank notes of Euro, Hong Kong dollar, U.S. dollar, Japanese yen, GB pound and Chinese yuan are seen in this picture

y Patrick Graham

LONDON (Reuters) – The dollar steadied against the yen and euro on Tuesday after its weakest day in a week, with markets still uneasy that a Federal Reserve meeting ending on Wednesday may provoke more investors to cash in the greenback’s recent gains.

Barclays was the latest major bank to cast some doubt on a dollar rally extending into a first quarter set to be dominated by the first policy initiatives from the Trump administration.

While investors have bet on the new president taking steps to bolster growth that will push inflation higher, there are also concerns that he may spark protectionism globally, driving cash into traditional safe havens like the yen.

A rise in Fed interest rates on Wednesday, a big reason for the dollar index’s 7 percent rise since September, looks fully priced in and there are also doubts over whether the U.S. central bank will want to send a strong signal that more tightening is to follow.

“We think the meeting may be a catalyst for people to take some profit on long dollar positions,” Barclays analyst Hamish Pepper said.

“The dollar tends not to perform particularly well in December. If you put that together with a well priced Fed meeting plus already long positioning, it is the right set-up for a pullback.”

The yen strengthened to less than 115 yen per dollar in Asian trade before settling at 115.34, down 0.2 percent on the day but almost a full yen stronger than 24 hours previously.

It has borne the brunt of the dollar’s rally in the past month, down 13 percent since early October. But some traders and analysts have begun to wonder if the Japanese currency might benefit next year if global political risks grow.

Barclays forecasts the dollar weakening to 100 yen in a year’s time.

The euro was little changed at $1.0629 having gained 0.7 percent on Monday as German bund yields rose amid signs Italy will bail out Italian bank Monte dei Paschi di Siena if need be.

Sterling inched higher helped by higher than expected inflation for November and comments from finance minister Philip Hammond backing a transition period to smooth the process of leaving the European Union.

“Rates markets are discounting close to five 25 basis point Fed rate hikes by the end of 2018,” analysts from BNP Paribas said in a note to clients.

“With the Fed likely to be cautious in its forward-looking language on Wednesday, those positioned long dollars heading into the meeting may be concluding that risk-reward is not attractive for staying in positions into the event risk.”

(Editing by Robin Pomeroy)

Yen falls vs dollar for second day to near two-week low

Japanese Yen Notes

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – The yen slid to a nearly two-week low against the dollar on Tuesday as risk appetite improved for a second straight session, undermining traditional safe havens such as the Japanese currency.

Repeated verbal warnings from Japan over the weekend and on Tuesday saying it was prepared to step in to weaken the currency has also held off investors seeking to buy the yen at the expense of the dollar. The greenback has struggled recently as the Federal Reserve is on track to raise U.S. interest rates gradually.

“Risk appetite is naturally tied to the belief that we’re in an ultra-low-yield environment and investment managers can’t simply sit here,” said Jeremy Cook, chief economist at payments company World First in London.

“We have to see a move any time we see the slightest bit of positivity, by grabbing yield in emerging markets currencies, for instance.”

Global stock markets were on the upswing overall led by European and Wall Street shares, adding to the positive risk sentiment. [MKTS/GLOB]

In late morning trading, the dollar rose 0.7 percent to 109.11 yen, after hitting a roughly two-week peak of 109.27 <JPY=>. The U.S. currency tumbled to an 18-month low of 105.55 yen last week after the Bank of Japan stood pat on monetary policy.

Finance Minister Taro Aso said on Monday Tokyo was ready to intervene to weaken the currency if moves were volatile enough to hurt the country’s trade and economy. He reiterated that message on Tuesday.

A key economic adviser to Prime Minister Shinzo Abe, Koichi Hamada, also said on Tuesday Japan would intervene in currency markets if the yen rose to between 90 and 95 per dollar.

“There’s definitely the possibility of intervention,” said World First’s Cook. “But I don’t think this will turn the market around. It will be more of a stop-gap measure.”

He added that the only thing that could reverse the yen’s recent strength is fiscal and monetary policy action and any change could happen as early as June.

Meanwhile, speculators were cutting favorable bets on the yen, having piled into the currency in the past few weeks. [IMM/FX]

In other currencies, the euro rose 0.8 percent to a near two-week high of 124.38 yen <EURJPY=>, pulling away from a three-year trough of 121.48 plumbed late last week.

The euro was flat against the dollar at $1.1388 <EUR=>. The dollar index <.DXY> was at 94.171, having hit its highest in nearly two weeks earlier and extending its rise from a 15-month trough struck on May 3.

(Reporting by Gertrude Chavez-Dreyfuss in New York; Additional reporting by Anirban Nag in London; Editing by James Dalgleish)

U.S. Dollar Hits 17 Month Low

A U.S. one-hundred dollar bill (C) and Japanese 10,000 yen notes are spread in Tokyo

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar hit a 17-month low against the safe-haven yen on Tuesday on investor concerns about global economic growth, while the euro was set to post its first daily loss against the dollar in more than a week on soft European economic data.

The dollar extended its losses against the yen to 8.2 percent for the year, with a downturn in stocks and commodity prices fueling the latest rally in the Japanese currency. The dollar hit 110.27 yen, its lowest level since late October 2014.

The dollar was last down 0.71 percent against the yen &lt;JPY=&gt; at 110.52 yen in late morning U.S. trading. The dollar had weakened against the yen in recent sessions in the aftermath of Federal Reserve Chair Janet Yellen’s dovish comments last week.

“The market is maybe giving up a little bit on the global growth story,” said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Limited in New York.

Traders cited huge options barriers at 110 yen, however, that could slow the greenback’s drop in the short term.

Investors were cautious about driving the yen much higher given the risk of intervention by Tokyo, with many wondering how much appreciation Japanese officials will tolerate before they are forced to act and weaken the currency.

The euro &lt;EUR=&gt; hit a session low against the dollar at $1.1337, down from a 5-1/2 month peak of $1.1437 touched on Friday.

German factory orders and a subdued start to the euro zone’s business activity in the first quarter weighed on the euro, while the currency briefly touched its session low against the dollar after Institute for Supply Management data showed a stronger-than-expected gain in the U.S. non-manufacturing sector in March.

“The concern is that going forward we will continue to see a loss of momentum in the euro zone,” said Sireen Harajli, currency strategist at Mizuho Corporate Bank in New York.

The Australian dollar hit a one-week low against the greenback of $0.7511 as oil prices fell for a third straight session. Lower commodity prices tend to reduce inflationary pressures, causing a worry for policymakers in the developed world, who want to head off the threat of deflation.

The dollar index &lt;.DXY&gt;, which measures the greenback against a basket of six major currencies, was last up 0.28 percent at 94.774.

(Reporting by Sam Forgione; Additional reporting by Anirban Nag in London; Editing by Dan Grebler)

Dollar turns lower against euro, yen on doubts over rally’s momentum

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar lost ground against the yen and was mostly flat against the euro on Wednesday, reversing earlier gains after traders took profits on skepticism that central bank policy in the United States and elsewhere would continue to diverge.

The dollar fell to a session low of 113.23 yen after hitting a more than two-week high against the Japanese currency of 114.55 yen early in the U.S. trading session. The euro was last up slightly against the dollar at $1.0866 after hitting a more than one-month low of $1.0826 earlier.

Early in the U.S. session, data showing stronger-than-expected growth in U.S. private payrolls in February added to a recent pile of reassuring U.S. economic data and boosted expectations that the Federal Reserve would hike interest rates at least once this year.

That optimism cooled, partly on doubts that uniformly strong U.S. economic data would continue and that the European Central Bank would announce a greater stimulus package and weaken the euro at the central bank’s meeting on March 10.

“People are taking a bit of a profit after a strong ride,” said Sebastien Galy, currency strategist at Deutsche Bank in New York, in reference to the dollar’s recent gains. “Everyone knows the dollar, for good reasons, is too expensive.”

The ADP National Employment Report showed U.S. private employers added 214,000 jobs in February. That was above economists’ expectations for a gain of 190,000, according to a Reuters poll.

Uncertainty remained over the impact of low oil prices on Fed policy and China’s economic growth, leading traders to take profits in the dollar’s gains, said Sireen Harajli, currency strategist at Mizuho Bank Ltd in New York.

Harajli said uncertainty ahead of Friday’s U.S. non-farm payrolls report for February may have contributed to the reversal in the dollar’s rally. Economists polled by Reuters expect U.S. employers to have added 190,000 jobs last month.

The U.S. dollar index, which hit a roughly one-month high of 98.582 earlier, was last down 0.17 percent at 98.176 <.DXY>. The dollar was last down 0.53 percent against the yen at 113.38 yen <JPY=>.

The dollar was last down 0.07 percent against the Swiss franc at 0.9962 franc <CHF=>.

(Reporting by Sam Forgione; Editing by Lisa Von Ahn)