TOKYO, July 18 — The US dollar nursed light losses today, weighed down by lower US yields and a rebound in the British pound from 27-month lows.
The US dollar index versus a basket of six major currencies was flat at 97.200 after shedding 0.2 per cent the previous day.
The index had climbed to a one-week peak of 97.444 the previous day on stronger-than-expected US retail sales and a slump in sterling. But it nudged lower as Treasury yields fell in the wake of weak US housing market data and concerns about the unresolved US-China trade conflict.
“The US dollar basically handed back earlier gains as Treasury yields pulled back and on IMF comments, and came back to where it was a few days ago,” said Takuya Kanda, general manager at Gaitame.Com Research Institute.
Various economic data have given conflicting signs regarding the state of the US economy, but that does not change the bigger picture of the dollar facing downward pressure due to an impending rate cut by the Federal Reserve, Kanda said.
The International Monetary Fund (IMF) yesterday said the greenback was overvalued by 6 per cent to 12 per cent, based on near-term economic fundamentals.
The Fed is widely expected to lower interest rates by 25 basis points (bps) at its July 30-31 policy meeting, with some in the market wagering on a larger 50 bp cut.
Sterling was steady at US$1.2434. It had stumbled to US$1.2382, its lowest since April 2017 yesterday amid growing risks of Britain leaving the European Union in a no-deal Brexit, before selling abated.
The euro was flat at US$1.1228 after crawling up 0.1 per cent yesterday. The single currency's gains were modest as it was restrained by expectations of easing from the European Central Bank as early as next week.
The dollar was unchanged at 107.945 yen following an overnight loss of 0.3 per cent.
The New Zealand dollar hovered near a three-month peak of US$0.6745 scaled overnight. The kiwi has gained more than 0.5 per cent this week, supported by positive domestic factors such as strong inflation.
The Australian dollar was steady at US$0.7008 after ending the previous day little changed. The market's immediate focus for the Aussie was upcoming Australian employment data at 0130 GMT and the potential impact on central bank monetary policy. — Reuters