Dollar prices inches up from 15-month low

Dollar inched away from a 15-month low versus a basket of currencies on Thursday, but was still looking wobbly due to doubts about whether there will be another U.S. interest rate rise this year.

The dollar index, which measures the greenback’s value against a basket of six major currencies, rose about 0.1 percent to 92.940. On Wednesday, it slid to 92.548, its weakest level since May 2016.

The greenback has been weighed down by political turmoil gripping Washington and by largely uninspiring U.S. economic data, particularly sluggish inflation, which is adding to uncertainty about the pace of future Federal Reserve policy tightening.

The euro eased 0.1 percent to $1.1847, backing away from a 2-1/2-year high of $1.19105 set on Wednesday – the common currency’s highest level since January 2015.

In contrast to the political risks and monetary policy uncertainty that have plagued the dollar, the euro has drawn support from expectations that the European Central Bank would eventually begin phasing out its easy policy. While the euro could run into some profit-taking ahead of the release of U.S. jobs data on Friday, it looks well supported, said Tareck Horchani, head of sales trading in Asia-Pacific for Saxo Markets in Singapore.

“I think overall it’s still a buy on dips and it can go to $1.20,” he said.

Against the yen, the euro slipped 0.2 percent to 131.08 yen, pulling back from Wednesday’s high of 131.40 yen, the euro’s strongest against the yen since February 2016.

The dollar inched 0.1 percent lower against the yen to 110.64, moving back toward a low of 109.92 yen set earlier this week, which was its lowest in more than six weeks.

The yen showed limited reaction to a cabinet reshuffle by Japanese Prime Minister Shinzo Abe, in which he reappointed key economic ministers while replacing his defence and foreign ministers.

Overall, the yen will probably be weighed down by the Bank of Japan’s loose monetary policy, said Heng Koon How, head of markets strategy for United Overseas Bank.

With the BOJ having recently pushed back the timing for achieving its inflation target, it is likely to continue with its ultra-easy monetary policy stance for a longer period of time, Heng said.

“This supports our base case for a higher dollar/yen,” he said, adding that he expects the dollar to be trading around 115 yen at the end of this year.

Sterling held steady ahead of the Bank of England’s (BoE) interest rate decision due later on Thursday.

The pound last changed hands at $1.3220. On Wednesday, it rose to$1.3250, its highest in nearly 11 months.

The BoE looks set to keep interest rates at a record low once again on Thursday, with investors looking for signs that, faced with Brexit, it is getting nearer to raising rates for the first time in a decade.

Source: Reuters