Dollar on back foot as US yields, crude prices dip; Aussie buoyed by hawkish RBA
TOKYO: The US dollar remained under pressure on Wednesday after slipping to a three-week low in the previous session, as a dip in Treasury yields and crude oil prices reduced the currency’s appeal. The Australian dollar hovered close to a three-week high against the greenback with Reserve Bank of Australia Deputy Governor Andrew Hauser saying at a Citi conference that the inflation outlook looked…
The US dollar experienced a decline on Wednesday as its appeal diminished due to a dip in Treasury yields and crude oil prices. In a similar vein, the Australian dollar neared a three-week peak against the greenback, driven by the Deputy Governor of the Reserve Bank of Australia, Andrew Hauser, expressing uncertainty about whether the central bank would require additional rate hikes next month.
The Australian currency rose by 0.1% to $0.7013, just below the previous day's peak of $0.7017. The US Dollar Index, which gauges the dollar against six counterparts, remained stable at 101.78 after a 0.2% drop on Tuesday. Investors have increasingly favored the US dollar as a safe haven amidst market turbulence stemming from the Middle East conflict and the AI boom, largely due to the dollar's energy independence.
Oil prices softened overnight following a five-month high as traders deliberated a meeting between Iran's president and Pakistan's army chief, a US-Iran mediator, alongside ongoing attacks on Saudi infrastructure and vessel assaults in the Gulf. Concurrently, Wall Street executed a robust session as technology earnings season kicked off with SpaceX's results.
Japan's Nikkei and South Korea's KOSPI surged on Wednesday. Economist and currency strategist at Commonwealth Bank of Australia, Carol Kong, noted that with equity market sentiment and growth outlooks closely linked to the performance of major tech firms, their earnings results could significantly impact the USD. Amid a "mixed" performance among traditional safe-haven assets this year, the USD has emerged as the most favorable.
The greenback held steady at 158.33 yen, and remained unchanged at $1.1229 per euro and $1.33735 against the British pound. However, traders remained cautious about the euro, considering France's escalating anti-government demonstrations and a deteriorating fiscal outlook. The government announced plans to bolster police with troops and a large security operation for additional protests scheduled for Saturday, acknowledging shortcomings in their response to violence last weekend.
Among central banks, the US Federal Reserve, European Central Bank, and Bank of Japan are set to announce policy decisions on consecutive days starting next Wednesday, with traders anticipating no changes in interest rates. The Reserve Bank of New Zealand and Bank of Canada will make policy announcements on the same day as the Fed, with traders betting on quarter-point hikes by both.
The New Zealand dollar experienced a 0.1% decline to $0.5677 on Wednesday, while Canada's loonie remained steady at C$1.4064.
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