Dollar rallies on safe-haven play following US stock and bond market rout
|Although the greenback fell to a seven-week low due risk-on trade on continued optimism over global recovery, dollar regained traction in New York afternoon as sharp drop in U.S. equities together with rising U.S. Treasury yields triggered broad-based safe-haven buying of usd. The Dow and S&P 500 tumbled 1.75% and 2.45% respectively while the benchmark 10-year U.S. treasury yields climbed to a one-hear high of 1.6138%.
On the data front, Reuters reported initial claims for state unemployment benefits totaled a seasonally adjusted 730,000 for the week ended Feb. 20, compared to 841,000 in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 838,000 applications in the latest week. Gross domestic product increased at a 4.1% annualized rate, the Commerce Department said in its second estimate of fourth-quarter GDP growth. That was a slight upward revision from the 4.0% pace reported last month. The economy grew at a record 33.4% rate in third quarter.
Versus the Japanese yen, dollar gained form 105.83 in Australia to 106.13 in Asian morning before retreating to 105.85. Price then rose to a 5-month peak at 106.40 in New York on rally in U.S. Treasury yields as well as cross-selling in jpy but briefly fell to 106.02 on active cross-buying in yen. Price later traded at 106.21 near the close.
The single currency caught a bid at 1.2157 in Asian morning and rallied to 1.2238 in Europe on usd's weakness and cross-buying in euro. The pair then ratcheted higher to a 6-week high at 1.2242 in New York morning before tumbling to 1.2161 due to broad-based rally in the greenback on the back of US stock and bond market rout.
The British pound swung broadly sideways after Wednesday's selloff. Cable rebounded to 1.4150 at Asian open and then gained to 1.4175 in Europe on usd's weakness before retreating to 1.4128 due to cross-selling in sterling. The pair then rose to 1.4182 in New York but only to tumble on intra-day usd rally as well as active unwinding of recent long sterling positions to as low as 1.4001.
Data to be released on Friday :
New Zealand imports, trade balance, exports, Japan Tokyo core CPI, Tokyo CPI, industrial output, retail sales, construction orders, housing starts, Germany import prices, UK nationwide house price, Swiss non-farm payrolls, GDP, KOF indicator, France consumer spending, GDP, CPI (EU norm), CPI, Italy trade balance, producer prices, U.S. personal income, personal spending, core PCE price index, PCE price index, trade balance, wholesale inventories, Chicago PMI, University of Michigan sentiment, and Canada producer prices, budget balance.
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