SINGAPORE- The dollar clung to overnight gains on Thursday, as investors trimmed bets against the greenback and sold the euro on concerns that the European Central Bank was worried about its rise.
The bounce has lifted the greenback about 1 percent above the 28-month low it hit against a basket of currencies on Tuesday and brought its first back-to-back daily gains since June.
Few analysts expect it to hold for too long, but it was steady in the Asia session, edging higher on the Australian dollar and euro. The yuan rose, however, after an upbeat service sector survey added another string to China’s impressive recovery.
“You could put (the dollar bounce) down to a bit of a trend reversal, it’s had a long run downwards,” said BNZ senior markets strategist Jason Wong.
“But if it is a floor, it’s only a short term one…everyone’s pretty bearish dollars for good reason,” he said, pointing to a Federal Reserve’s policy outlook that will likely keep rates very low for a long time.
For about a fortnight now the dollar has been fighting to hold the line after dropping 10 percent from a March peak. As traders start to temper stretched bets on the euro it is tracking for its best week on the common currency in two months.