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Dollar starts week under pressure

Monday, August 18 08:07:59

The dollar edged down against a basket of currencies on Monday, as U.S. Treasury yields wallowed close to 16-month lows and made the greenback less attractive.

Sterling rose after the Bank of England indicated that UK interest rates may have to rise even before wage growth recovers, backtracking from earlier comments that prompted markets to push out the risk of a rate hike.

But the U.S. dollar, euro and yen were little changed from their levels late in New York on Friday, where heightened tensions in Ukraine drove global bond yields to fresh lows.

The euro last traded at $1.3397, flat on the day and well within a slim $1.3333-$1.3445 range seen so far this month. Against the yen, the common currency edged down slightly to 136.05.

The greenback bought 102.32 yen, slightly down from Friday but still roughly in the middle of this month's 101.51-103.05 range.

The dollar index, which tracks the U.S. unit against a basket of rivals, edged down to 81.414.

The latest data from the Commodity Futures Trading Commission released on Friday showed that speculators reduced bullish bets on the U.S. dollar in the week ended Aug. 12, after net longs had hit a more than one-year high in the previous week. Net longs declined for the first time in four weeks.

U.S. Treasury yields remained close to recent lows, with the yield on the benchmark 10-year U.S. Treasury note at 2.357 percent in Asia. That was not far from its U.S. close of 2.345 percent on Friday, when it dropped as low as 2.30 percent, its lowest since June 2013.

Dollar investors remained cautious ahead of a gathering of top central bankers at the Federal Reserve's annual Jackson Hole symposium starting on Thursday, at which Janet Yellen will speak on Friday in her first appearance at the retreat as head of the central bank.

Risk appetite remained slack as investors also monitored events in the Ukraine, as Kiev and Western governments waited to see if Russia would intervene in support of the increasingly besieged rebels.

Sterling rose as high as $1.6739, from around $1.6689 late in New York on Friday, and was last up about 0.3 percent at $1.6728. It also firmed against the euro, which dipped about 0.3 percent to 80.06 pence.

Last week, the pound plumbed a four-month trough of $1.6657 after the BOE slashed its forecast for wage growth and stressed that any interest rate hike would depend largely on an improved outlook for pay. (Reuters)

For more visit: www.businessworld.ie