On Monday, the greenback inched lower against a basket of the other major currencies, while sterling was suddenly lower as fears over prospects for a ‘hard Brexit’ weighed.
The U.S. dollar index, which gauges the greenback’s strong point against a trade-weighted basket of six major currencies, eased to 102.08.
After Friday’s U.S. nonfarm payrolls report for December, demand for the dollar continued to be underpinned which indicated a slowdown in hiring, but the fastest wage progress in more than seven years, supported the case for rate hikes this year.
The Fed Reserve increased interest rates in December and indicated that it anticipates to hike rates three more times in 2017.
Higher rates increase the greenback by making the currency more attractive to yield-seeking investors.
On Monday, Boston Fed President Eric Rosengren called for the U.S. central bank to step up the pace of interest rate increases, notice that inflation could overshoot its target if it does not.
The greenback was lower compared to the yen, with USD/JPY is sliding 0.45% to 116.48, down from an intra-day high of 117.53.
The euro pushed higher, with EUR/USD increases 0.2% to 1.0554.
The pound was suddenly lower compared to the greenback and the euro, with GBP/USD hitting lows of 1.2125, the lowest level since October 28, before pulling back to 1.2144.
EUR/GBP hit peaks of 0.8690, the strongest level since November 15 and was previously at 0.8688, up 1.33% for the day.
The selloff in sterling came after British Prime Minister Teresa May stated on Sunday that the country would not be keeping “bits” of European Union membership.
The statements were seen as a sign that the UK won’t try to negotiate continued full access to the European single market when it exit the European Union.
Sterling unsuccessful to find support after May stated on Monday it was wrong to say a “hard Brexit” was inevitable.
Somewhere else, “the Turkish lira fell to a fresh record low against the dollar on Monday after ratings agency Moody’s said that bank profits will be hit by an increase in bad loans this year and warned of a “general worsening” in the investment climate in the country.,” according to the report.
After starting the day at 3.6433, USD/TRY jumped 2.48% to trade at 3.7342.
On Additional News
On Tuesday, the greenback slipped as the yuan steadied on a jump in Chinese factory gate prices.
The dollar index declined 0.16% to 101.76 at 02:15 ET. It was flat at the 6.88 yuan mark.
China’s PPI was up 5.5% in the December vs. forecast rise of 4.5%.
That was the fastest pace of development in Chinese factory gate prices in five years as commodity price increases.
This year, the Chinese statistic could increase expectations of global reflation. The greenback fell back to the 115 level against the yen.
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