Dollar tumbles vs yen on risk aversion: June 07, 2017

Market Review - 06/06/2017  22:40GMT  

Dollar tumbles vs yen on risk aversion

The greenback dropped against majority of its peers on Tuesday especially versus the yen ahead of what market considered as risk events on Thursday with U.K.'s general election, ECB's policy decision and testimony by ex-FBI chief James Comey's testimony before a U.S. Senate panel. 

Versus the Japanese yen, dollar remained under pressure in Australia and fell sharply in Asia on broad- based yen buying on risk aversion. Price easily penetrated May's 110.24 low to 109.73 after tripping stops along the way. Intra-day decline continued in Europe to 109.28 and price later hit a 6-week trough of 109.23 in NY due to falling U.S. Treasury yield afternoon before stabiling. 

The single currency rebounded to 1.1278 ahead of European open before dropping to an intra-day low at 1.1241 ahead of New York open. However, euro pared its losses and rose to 1.1277 in New York morning due partly to cross-buying of euro especially vs sterling, price later hit session highs of 1.1283 in New York afternoon, just 2 ticks shy of last Friday's near 7-month peak at 1.1285. 

The British pound traded with a firm bias in Asia and briefly spiked up to session high at 1.2951 at European open, however, price swiftly pared its gains and dropped to an intra-day low at 1.2872 at New York open on cross-selling of sterling especially vs euro due to renewed market's concern on latest election polls which showed narrowing lead by the ruling Conservative party. 

In other news, Germany's Merkel said 'low ECB interest rate make business challenging for German savings banks, though I cannot judge ECB policy.' 

On the data front, retail sales in the 19 countries sharing the euro increased by 0.1 percent in April from March, the European Union's statistics office Eurostat said, slightly below the average market expectation of a 0.2 percent rise. 

Data to be released on Wednesday: 

New Zealand manufacturing sales, Australia construction index, GDP, Japan leading indicator, coincident indicator, Germany industrial orders, UK Halifax house price, Italy retail sales, EU GDP, US mortgage applications and Canada building permits.