Classifieds | Archives | Jobs | About TGT | Contact | Subscribe
 | 
Last updated 0 minute ago
Printer Friendly Version | TGT@Twitter | RSS Feed |
HOME LOCAL MIDEAST ASIA WORLD BUSINESS SPORT OPINION WRITERS
Euro set for worst week since 2016 as dollar extends rally
February 10, 2018
 Print    Send to Friend

LONDON: The dollar rose on Friday to extend its recent gains while the euro was headed for its worst weekly performance since Nov. 2016 after the global stock market sell-off squeezed investors positioned for a weaker greenback.

Betting on a weaker dollar versus the euro has been one of the most popular trades this year, with a resurgent European economy fuelling expectations the European Central Bank will shrink its balance sheet sooner than expected.

After earlier rising, the euro slipped and was down 0.1 per cent at $1.2234 at 1215 GMT, bringing weekly losses to 1.7 per cent. So far this year, the euro remains 2 per cent higher. It hit a three-year high of $1.2538 in late January.

More broadly, the dollar against a basket of currencies was up 0.3 per cent and has now gained 1.4 per cent this week, the best performance since November 2016. The US currency remains down 1.8 per cent this year, however.

Stephen Gallo, European Head of FX Strategy at BMO Capital Markets, said the sell-off “in equity markets and risk assets has led to a healthy correction in FX markets, in the short dollar positions getting squeezed.” Gallo said that unless there was a fundamental shift in the health of the global economy, which this week’s downturn in equity markets did not imply, the dollar remained in a “multi-year downward trend. “Don’t let this take your eye off the longer-term picture of dollar weakness,” he said.

The dollar recovered some ground against the yen in early European trading after earlier falling to near four-month lows as investors sought out safety in the Japanese currency.

The slump in stock prices continued in Asia and Europe on Friday.

The US House of Representatives joined the Senate in approving a bill to end an overnight federal shutdown, averting serious interruption of the government’s business that could have hit sentiment towards the dollar.

Before this week’s market mayhem, one of the most popular trades in the currency market was to buy the euro on expectations of unwinding of stimulus by the ECB and to sell the yen on the view that the Bank of Japan will be the last to exit from its ultra-loose policy.

Many market players are closing existing positions rather than making new bets as they look to reduce risk exposure during the pick up in volatility.

Equity market volatility has surged this week, and while foreign exchange markets have remained far calmer, the carnage this week has upended some popular trades.

Reuters

Add this page to your favorite Social Bookmarking websites
Comments
 
Post a comment
 
Name:
Country:
City:
Email:
Comment:
 
    
    
Related Stories
Dollar bounces across the board as US bond yields rise
LONDON: The US dollar rallied to a seven-week high on Monday after a rise in the 10-year US Treasury yield to within a whisker of 3 per cent sent investors rushing to buy..
US dollar share of global currency reserves falls
NEW YORK: The US dollar’s share of currency reserves reported to the International Monetary Fund declined in the final quarter of 2017 to a four-year low, as other curren..
Trade war fears recede
LONDON: The dollar held on to its gains on Thursday after a big rise in the previous session, but traders said the outlook for the greenback remained negative as it heade..
Dollar decline rekindles reserve currency worries
NEW YORK: The US dollar’s nosedive over the last year — only exacerbated by the recent threat of trade wars — is rekindling concerns that the greenback’s standing as the ..
US dollar outlook darkens
NEW YORK: The US dollar could face headwinds if President Donald Trump’s proposals to impose stiff tariffs on steel and aluminium imports are enacted, with the biggest ri..
FRONTPAGE
 
GALLERY
 
PANORAMA
 
TIME OUT
 
SPORT
 
 
Advertise | Copyright