TOKYO, Sept 18 — The US dollar was steady in early Asia trading today after falling overnight as downbeat US data cast a shadow over the economic outlook, while the Japanese yen stabilised after rising against the greenback and the euro the previous day.
The US dollar gave up gains made after the Federal Reserve upgraded its 2020 GDP forecast this week to trade in negative territory yesterday. It was last quoted at 92.866 against a basket of major currencies, and was on track for a 0.3 per cent weekly loss.
A stream of US data showed jobless claims remained elevated at 860,000, while both housing starts and the Philadelphia Fed business index fell. The Fed this week said it expected the US economy to shrink by far less than previously forecast in 2020 and promised to keep rates ultra-low for a prolonged period.
The safe-haven yen last traded at 104.76 per US dollar, after hitting a seven-week high at 104.52 yesterday. Against the euro, the yen hovered near the 1½ month high of 123.29 touched overnight, changing hands at 124.14.
“The dollar/yen dropped overnight almost too much, although it's been falling since Monday,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
He said losses in US stock futures were also contributing to a weaker US dollar. US stocks fell yesterday as technology-related shares slid for a second day and as the downbeat economic data weighed on the wider market.
“For the US dollar to regain its upward trend, it’s necessary for the market to make sure that the U.S. stocks take a pause from a correction in stock prices,” he said.
Sterling bought US$1.2986, having lost around one cent yesterday after the Bank of England said it was looking more closely at how it might implement negative interest rates amid rising coronavirus infection cases, higher unemployment and a possible new Brexit shock.
But the cable later erased losses after the Financial Times reported that European Commission President Ursula Von der Leyen said she was convinced a trade deal with Britain was still possible.
The euro, meanwhile, was little changed at 1.1853 per US dollar today. The euro zone PMI data next week will be a key focus, with some analysts saying a strong PMI could take the common currency back to the 1.19 level versus the US dollar.
The Australian and New Zealand dollars were marginally stronger in Asian trade, with the Aussie 0.15 per cent higher at US$0.7323 and the kiwi trading up 0.34 per cent at US$0.6778.
The offshore yuan was trading at 6.7524 per US dollar after hitting a high of 6.7332. The yuan has risen more than 6 per cent from lows against the dollar in late May as China's economy has recovered from the fallout of the coronavirus crisis, although its rapid rise has raised some concerns.
The Swiss franc was last quoted at 0.9078 against the greenback. — Reuters