Dollar Continues Slide While Sterling Surges

06 September 2017 6:31:33 AM

By: DailyForex.com

The dollar continued its decline on Wednesday morning, heading towards 4 1/2 month lows as relations with North Korea show no signs of warming.  On Tuesday, a North Korean diplomat mentioned that his country was prepared to send more “gift packages” to the United States, sending traders further into the arms of safe haven assets, including the yen.  The dollar was trading at 108.61 yen as of 11:28 a.m. HK/SIN, after hitting a low of 108.50 earlier in the session and flirting with lows not seen since mid-April.

Also pressuring the dollar were comments from Federal Reserve Governor Lael Brainard on Tuesday, who noted that inflation was “well short” of target levels, so the Fed should be cautious about raising U.S. interest rates.  Brainard’s comments called into question the possibility of a final interest rate hike before the end of 2017.

Asian stock indexes were broadly lower on Wednesday also as a result of North Korean tensions.  They mirrored losses on Wall Street overnight.  The Shanghai Composite was down 0.32 percent while South Korea’s Kospi was down 0.45 percent.  Australia’s ASX 200 dropped 0.58 percent near midday.

The British pound was one of the few victors in early trade, bouncing back over $1.30 for the first time in more than three weeks as British Prime Minister Theresa May pushes forward with a bill to help implement Brexit advances.  If May’s bill passes, it is likely that the sterling will continue its push forward.  A failure for May will require that existing EU legislation be copied into British domestic law, something that would likely spell trouble for the sterling.  The pound was at $1.3031 in the Asian morning session.  The Bank of England will meet next week to discuss policy.

Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.

DailyForex Newsletter
0 User Reviews

Registration is required to ensure the security of our users. Login via Facebook to share your comment with your friends, or register for DailyForex to post comments quickly and safely whenever you have something to say.

Log in | Create a DailyForex.com Account Now