Tokyo - The dollar stepped further away
from a 14-year peak against a basket of currencies on Thursday,
as investors locked in gains from its two-month-old rally after
Donald Trump won the US presidential election.
The dollar had soared on Trump's plans to cut taxes, boost
fiscal spending and protectionist trade rhetoric, all seen as
inflationary and lifting US bond yields.
But uncertainty on exactly what his presidency will bring is
prompting some players to close their bets on the dollar ahead
of Trump's planned news conference on Jan. 11. He will be
inaugurated on January 20.
"Some people say the 'Trump rally' has come to an end
already. Others say the real rally will begin after he will take
office," said Kyosuke Suzuki, director of forex at Societe
Generale. "It's not clear what the market's next theme will be."
The dollar's index against a basket of six major currencies
slipped to 102.23 after having hit a 14-year high
of 103.82 on Tuesday, when a strong reading from a U.S.
manufacturing survey boosted the currency.
The dollar's initial support lies at 101.91, its Dec. 30
low, though a breach of that level would take it to three-week
lows and could send a bearish signal in the near term.
The euro rose 0.3 percent in Asia to $1.0524, having
recovered from a 14-year low of $1.0340 touched on Tuesday.
The common currency was helped at the margin by data showing
euro zone prices rose faster than expected in December and
surveys suggesting business growth reached its highest in more
than five years.
The dollar slipped 0.5 percent to 116.62 yen after
having peaked at 118.605 on Tuesday, just shy of its
10-1/2-month high of 118.66 touched on December 15.
Some traders noted that there may have been dollar selling
by Japanese exporters after their New Year holidays.
The Australian dollar hit a two-week high of
$0.7303.
"Recent economic data is pretty good so markets are on
risk-on mode overall and the dollar is supported. But U.S. bond
yields are being capped so the dollar is losing its drive for
further gains," said Yukio Ishizuki, currency strategist at
Daiwa Securities.
U.S. bond yields edged down on Wednesday, with the 30-year
yield hitting a four-week low, even as the minutes from the
Federal Reserve's December policy meeting showed almost all
policymakers thought the economy could grow more quickly because
of fiscal stimulus under the Trump administration.
The Chinese yuan stabilised after Chinese authorities set
its mid-point in line with market expectations on Thursday, a
day after they tried to shore up the currency with higher a
mid-point and intervention.
Their actions led to the biggest daily gain in about a year
in offshore yuan on Wednesday.
The offshore yuan last traded at 6.8860 per dollar,
after having gained 1.3 percent on Wednesday and hitting a
one-month high of 6.8658 per dollar.
"The price action was pretty big. I suspect it was propelled
by unwinding of those who had made big bets against the yuan on
speculation that capital outflows will continue under a strong
dollar," Daiwa's Ishizuki said.
The squeeze in the offshore yuan is leaving it more
expensive than the onshore rate, which stood at 6.928
to the dollar. The offshore renminbi, or the yuan, has been
mostly traded at a slight discount to the onshore one.
The Thomson Reuters/Hong Kong Exchange index of the offshore
yuan hit its highest level in almost six months, though
the index for onshore yuan still stood within its ranges
of the past few weeks.
A private survey on China's services sector showed growth in
the industries accelerated to a 17-month high in December,
underpinning risk sentiment.