TOKYO (Reuters) – The dollar nursed light losses on Thursday, weighed down by lower U.S. yields and a rebound in the pound from 27-month lows.
The dollar index .DXY versus a basket of six major currencies was flat at 97.200 after shedding 0.2% the previous day.
The index had climbed to a one-week peak of 97.444 the previous day on stronger-than-expected U.S. retail sales and a slump in sterling. But it nudged lower as Treasury yields fell in the wake of weak U.S. housing market data and concerns about the unresolved U.S.-China trade conflict.
“The dollar basically handed back earlier gains as Treasury yields pulled back and on IMF comments, and came back to where it was a few days ago,” said Takuya Kanda, general manager at Gaitame.Com Research Institute.
Various economic data have given conflicting signs regarding the state of the U.S. economy, but that does not change the bigger picture of the dollar facing downward pressure due to an impending rate cut by the Federal Reserve, Kanda said.
The International Monetary Fund (IMF) on Wednesday said the greenback was overvalued by 6% to 12%, based on near-term economic fundamentals.
The Fed is widely expected to lower interest rates by 25 basis points (bps) at its July 30-31 policy meeting, with some in the market wagering on a larger 50 bp cut.
Sterling GBP=D4 was steady at $1.2434. It had stumbled to $1.2382, its lowest since April 2017 on Wednesday amid growing risks of Britain leaving the European Union in a no-deal Brexit, before selling abated.
The euro EUR= was flat at $1.1228 after crawling up 0.1% on Wednesday. The single currency’s gains were modest as it was restrained by expectations of easing from the European Central Bank as early as next week.
The dollar was unchanged at 107.945 yen JPY= following an overnight loss of 0.3%.
The New Zealand dollar NZD=D4 hovered near a three-month peak of $0.6745 scaled overnight. The kiwi has gained more than 0.5% this week, supported by positive domestic factors such as strong inflation.
The Australian dollar AUD=D4 was steady at $0.7008 after ending the previous day little changed. The market’s immediate focus for the Aussie was upcoming Australian employment data at 0130 GMT and the potential impact on central bank monetary policy.
JULY 18, 2019 / 10:46 AM / UPDATED 3 HOURS AGO