The dollar managed to recoup some of yesterday’s losses against the yen, when the US currency tumbled on the President’s remarks about a government shutdown. Other majors also weakened with the kiwi underperforming as it tumbled to more than a two-month lows against the greenback. Oil prices slipped after yesterday’s surge.
During another relatively quiet trading day in Asia, the dollar managed to reverse its losses and post a moderate gain against the yen. Dollar/yen was last trading at 109.27, up a quarter of a percent on the day. President Trump rattled markets yet again with his speech about a possible government shutdown and exit from the NAFTA trade treaty on Tuesday night. The dollar took a breather today and gained against the yen, as the US Congress is in summer recess until September 5 and upon return, it will have about 12 working days to approve spending measures and prevent the government from shutting down. Traders will be focusing on the central bankers’ meeting in Jackson Hole that starts today. They will be on the lookout for any clues about future monetary policy steps by either the European Central Bank or the Federal Reserves.
Internal political woes shook up the currencies down under. The kiwi lost ground and tumbled against its US counterpart, deepening yesterday’s losses when it fell on curtailed economic growth outlook by the New Zealand government. Many investors have raised concerns over political instability and question the government’s chance to be re-elected next month. Kiwi/dollar was last trading at 0.7197, hitting its lowest point since mid-June. Its cousin, the aussie also tumbled and was last trading at $0.7837. The aussie weakened on news that some high-profile politicians with dual citizenship may not be able to stand for Parliament unless they renounce their other citizenship.
Sterling was under pressure as the British currency dipped below the $1.28 level for the first time since June. Concerns over Britain’s economic prospects and its exit from the EU are increasing and pushing the pound lower. Markets are unimpressed with the UK government’s efforts to provide clarity and stability during this painful process. All eyes will be on the release of the second estimate of second-quarter GDP figure for the UK at 8:30 GMT, which will include details on business spending. Pound/dollar was last trading at $1.2790.
The euro faded against the greenback to trade at $1.1791 as traders await the Jackson Hole meeting with ECB President Draghi expected to speak tomorrow. The common currency also fell modestly against the pound to last trade at 0.9218, after four days of gains.
Oil prices fell slightly against yesterday’s surge with Brent last trading at $52.48 a barrel and WTI at $48.29. Linked to the dollar strength, gold prices gave up most of yesterday’s gains and fell to $1,286.32.
