SINGAPORE- The dollar held firm on Tuesday, shrugging off selling pressure from a move higher in equities, as investors seemed to temper their bearish bets against the greenback ahead of a Thursday speech from US Federal Reserve Chair Jerome Powell.
The dollar, which often falls when stocks rise as investors seek out riskier currencies, had inched higher overnight -repelling the Australian dollar back under 72 US cents and pushing the euro below $1.18.
It hung on to those gains early in the Asia session and the Aussie last traded at $0.7162 and the euro at $1.1791. It was steady on the yen at 105.97 per dollar.
Fed Chair Powell on Thursday addresses a virtual Jackson Hole symposium with the theme “Navigating the Decade Ahead: Implications for monetary policy.” Investors expect he might address the bank’s strategy – especially its 2 percent inflation target, with speculation that could become an average rather than nominal aim.
“If we don’t get dovishness, I expect you might actually get rates rising and pop up higher in the US dollar,” said Westpac FX analyst Imre Speizer.
“The dollar has had a massive fall since March,” he said. “I think what we’re seeing now is any excuse to buy it back as the punters who have been short all the way down get quite nervous and take the money off the table.”
A small overnight rise in yields also supported the dollar and against a basket of currencies it held the line at 93.282, about 1.3 percent higher than a two-year trough it hit a week ago.
It is about 9.4 percent below its March peak, though there are signs its decline is slowing as it is broadly steady in August. Net bets against the dollar eased from a nine-year high last week and the US currency has made ground broadly in recent days.
Sterling was pressured back below $1.31 to last fetch $1.3071, and not helping was lack of progress in the latest round of Brexit talks with the European Union. — Reuters