NEW YORK, Oct 25: The dollar was on the defensive against major rivals on Friday, pressured by steep falls in US equities amid growing conviction markets have already priced in much of the current positive economic and corporate news.
We’re really thin on news. The weak stock market has been the only impetus for the dollar’s moves today, said Lauren Germain, currency strategist at Banc of America Securities in New York.
There is a bit of concern that a lot of the positive corporate and economic news had already been priced in, said Shaun Osborne, chief currency strategist at Scotia Capital in Toronto.
The euro’s gains against the dollar were thought to be driven to a certain degree by investor desire to build positions in high-yielding and “commodity currencies”, such as the Canadian, Australian and New Zealand dollars.
Positive UK economic data buoyed expectations that Britain was likely to lead major economies in raising interest rates, and sterling held near a five-year high against the dollar set earlier in the session.
The euro traded at $1.1809, a gain of 0.15pc from Thursday’s New York close. Against the yen, the euro was trading slightly lower at 129.06 yen.
The dollar fell to 109.29 yen, down 0.24 per cent on the day. Against the Swiss franc, the greenback declined 0.27 per cent to 1.3095 francs.
The US dollar kept to a tight trading range against the Canadian dollar, but slipped slightly to C$1.3061. The Australian dollar traded in similar fashion against the greenback, rising to US$0.6998.
Analysts also said the Group of 20 finance ministers’ meeting in Morella, Mexico, over the weekend was exerting a little pressure on the dollar, especially against the yen. US Treasury Secretary John Snow had earlier indicated he will press for more flexible Asian currencies during the gathering.
Investors are nervous over the G20 meeting and the currency markets will be taking on a political undertone, said Scotia’s Osborne. Ahead of the G20 meeting, most market participants have kept their short positions on the dollar against the yen, analysts said.—Reuters