Wed, Feb 01, 2023 @ 08:26 GMT
HomeContributorsFundamental AnalysisDollar Weighed By Political Woes, Close To 13-Month Low, Aussie Gains

Dollar Weighed By Political Woes, Close To 13-Month Low, Aussie Gains

As Asian traders were about to complete their trading day, the dollar index was up on the day after previously hitting a fresh 13-month low. Excluding aussie/dollar, most major pairs were moving within a relatively narrow range during Asian trading hours, while gold was down after recording a one-month high.

The dollar’s index against a basket of major currencies fell to 93.82 today – it’s lowest since June 24 of last year. It later managed to recover to last trade 0.1% up on the day. Still the greenback is likely to remain under pressure on the back of developments on the US political front that have the capacity to derail the Trump administration’s plans on tax reform and infrastructure spending. The latest blow for President Donald Trump was White House spokesman Sean Spicer’s resignation on Friday. Rising uncertainty is spurring demand for US Treasuries, pushing yields down and making the US currency relatively less attractive.

Dollar/yen was down on the day and close to the more than one-month low of 110.76 it recorded earlier in the day. Euro/dollar was slightly down after previously hitting a fresh 23-month high of 1.1684. The eurozone’s common currency strongly rallied last week following the European Central Bank meeting. This week it will likely need fresh catalysts in order to maintain momentum. Pound/dollar was up on the day and marginally above the 1.30 handle after opening below this level.

In terms of releases, Japan’s July preliminary manufacturing PMI was released at 52.2. Expectations were for a reading of 52.3, while June’s respective number stood at 52.4. Dollar/yen edged higher upon release of the data, though the greenback’s gains were short-lived.

The Australian and New Zealand dollars remained close to multi-month highs relative to the greenback. Aussie/dollar traded at 0.7952, up 0.6% on the day and fairly close the more than two-year high of 0.7987 from last week. Reserve Bank of Australia Deputy Governor Guy Debelle’s dovish remarks last week halted the aussie’s advance versus the US currency. Kiwi/dollar was slightly down at 0.7436, but close to Friday’s near 13-month high of 0.7458.

Away from forex markets and in commodities, gold gained on the back of overall dollar weakness and potentially rising uncertainty. The precious metal rose to a one-month high of $1257.03 an ounce. It later fell possibly due to profit taking. It last traded around $1254.50. WTI and Brent crude were up 0.2% and 0.3% on the day, at $45.84 and $48.17 a barrel respectively.

Throughout the rest of the day, market participants will be mostly paying attention to preliminary manufacturing and services PMI data out of the eurozone and the US for the month of July, as well as June existing home sales for the US.

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