· · • The dollar was down against most of its peers on Wednesday, pressured by a cocktail of negative factors including heightened concerns over a partial U.S. government shutdown and tension between the White House and the Federal Reserve.
Fears of a U.S. and global economic slowdown have sent U.S. 10-year yields tumbling by around 25 basis points in December, adding to the increasing strain on the dollar and further darkening its outlook.
• “Moderating U.S. growth and political tensions are negative for the dollar and we expect continued weakness,” said Sim Moh Siong, currency strategist at Bank of Singapore.
“I expect the biggest winner of global risk-aversion to be the yen.”
• The dollar has struggled particularly against the yen, losing ground for eight straight sessions as a broad risk-off move in financial markets benefited the safe-haven Japanese currency. It tried to steady in early Asian trade on Wednesday, edging up 0.1 percent on the yen to 110.43.
• Analysts at Mizuho Bank said the sharp decline in U.S. 10-year treasury yields has dented the dollar’s performance versus its peers. U.S. 10 year paper is currently yielding 2.73percent, having fallen from 3 percent in early December.
• The euro and the British pound tacked on 0.2 percent each, changing hands at $1.1415 and $1.2705, respectively. The Australian dollar added 0.1 percent to fetch $0.7043.
• Bank of Japan Governor Haruhiko Kuroda blamed recent instability in stock markets on growing global economic
Conceding that it was taking longer than expected to achieve his 2 percent inflation target, Kuroda said
• Japan’s top government spokesman said on Wednesday his government wants to promote rules that protect free and fair trade for the global economy.
Chief Cabinet Secretary Yoshihide Suga, speaking during a recording of a TV program at Japanese broadcaster BS11, said Japan is ready to explain its stance in trade negotiations with the United States.
Suga also warned that the global rules of trade could be compromised if all countries simply pursued their own interests.
• Oil prices were mixed on Wednesday as the U.S. benchmark rebounded from steep losses in the previous session, even though concern over the health of the global economy continued to overshadow the market.
U.S. West Texas Intermediate (WTI) crude futures CLc1, were up 13 cents, or 0.31 percent, at $42.66 per barrel, at 0748 GMT. Prices earlier rose as much as 2 percent. They slumped6.7 percent in the previous session to $42.53 a barrel, the lowest since June 2017.
Brent crude oil futures LCOc1 were down 29 cents, or 0.57 percent, at $50.18 a barrel and earlier fell to the lowest since July 2017. They skidded 6.2 percent in the previous session to$50.47 a barrel.
Reference: Reuters, CNBC
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