Forex - Dollar Steady Near 1-month Low, Sterling Firm after Brexit Boost
The dollar was holding steady near one-month lows against a currency basket on Thursday as markets awaited trade developments, while the pound remained firm after rallying in the previous session as fears over a no-deal Brexit eased.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was at 94.45 by 03:57 AM ET (07:57 GMT), not far from Tuesday’s one-month lows of 94.34.
Market sentiment continued to be supported by hopes that Canada will join the new trade agreement between the U.S. and Mexico aimed at overhauling the North American Free Trade Agreement ahead of a Friday deadline. But the new trade deal did little to indicate how a trade spat between the U.S. and China will play out after talks last week ended with little progress and both countries slapped fresh reciprocal tariffs on imports. Sterling was steady after rising above the 1.30 level against the dollar for the first time in three weeks on Wednesday after European Union negotiator Michel Barnier said the bloc was prepared to offer Britain a partnership after Brexit.
GBP/USD was at 1.3028 after gaining 1.23% in the previous session, its largest one-day percentage gain since March 21. The pound was also stronger against the euro, with EUR/GBP edging down to 0.8982 after ending the previous session with a loss of 1.09%.
The euro was little changed against the dollar, with EUR/USD at 1.1704 after edging up 0.12% in the previous session.
The dollar was a touch lower against the yen, with USD/JPY dipping 0.07% to 111.63 after rising 0.45% on Wednesday. Meanwhile, the Turkish lira continued to slide lower against the dollar, falling to its lowest level in more than two weeks. Deteriorating relations between the U.S. and Ankara and worries about Turkish President Tayyip Erdogan's increasing control over monetary policy and the economy have seen the lira tumble almost 40% this year and hit record lows mid-month. Elsewhere in emerging markets, Argentina's peso slumped to record lows against the dollar as the country sought the early release of standby funds from the International Monetary Fund. Emerging market currencies have been hard hit by concerns that higher U.S. interest rates will pressure countries that have borrowed heavily in dollars in recent years.