U.S. Dollar Extends Slide
January 24 2018 - 10:06PM
RTTF2
The U.S. dollar continued to be lower against its major
opponents in the Asian session on Thursday, following comments from
the U.S. Treasury secretary Steve Mnuchin favoring a weak domestic
currency to boost U.S. trade.
A weak currency is beneficial to the economy as it enhances
"trade and opportunities," Mnuchin told at the World Economic Forum
in Davos, Switzerland, on Wednesday.
The short term value of the dollar is "not a concern of ours at
all," he said.
The Secretary of Commerce, Wilbur Ross, defended Trump's
protectionist stance at the forum, saying that trade wars happen
every day.
"A trade war has been in place for quite a little while, the
difference is the U.S. troops are now coming to the rampart," he
said.
Renewed worries over Donald Trump's America First policies and
other protectionist measures like tax cuts also weighed on the
dollar.
Investors also look ahead to the ECB meeting later today for
clues to whether the central bank would continue stimulus measures
at least through September.
Traders will be keeping a close eye on the wording of the
forward guidance after policymakers agreed in December to 'revisit'
it early this year.
The dollar slumped on Wednesday after Mnuchin's remarks. It
dropped 0.98 percent against the yen, 1.35 percent against the
franc, 0.89 percent against the euro and 1.7 percent against the
pound for the day.
The greenback that closed Wednesday's deals at 1.2407 against
the euro slipped to more than a 3-year low of 1.2459. The greenback
is seen finding support around the 1.27 level.
The greenback dropped to a 1-1/2-year low of 1.4329 against the
pound and a 2-1/2-year low of 0.9391 versus the franc from
yesterday's closing values of 1.4235 and 0.9448, respectively.
Continuation of the greenback's downtrend may see it challenging
support around 1.44 against the pound and 0.91 against the
franc.
The greenback fell to a 4-month low of 1.2293 against the
loonie, 4-1/2-month low of 0.8119 against the aussie and more than
a 4-month low of 108.74 against the yen, compared to yesterday's
closing values of 1.2346, 0.8062 and 109.22, respectively. If the
greenback falls further, it may find support around 105.00 against
the yen, 0.83 against the aussie and 1.21 against the loonie.
Looking ahead, German Ifo business climate index for January is
set for release in the European session.
At 7:45 am ET, the European Central Bank announces decision on
rates. Economists expect the bank to maintain its refi rate
unchanged at zero percent.
In the New York session, Canada retail sales for November,
weekly jobless claims for the week ended January 20, wholesale
inventories and new home sales for December are set for
release.
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