Dollar Steps Back From Iran-Spurred Gains
The U.S. dollar lost ground against most key rivals Tuesday, pulling away from gains notched after the U.S. and other major world powers struck an nuclear accord with Iran.
The ICE dollar index , a measure of the greenback against six rivals, fell to 80.837 from 80.884 late Monday in North American trade. The WSJ Dollar Index fell to 73.55 from 73.63.
Investors later Tuesday may react to a U.S. consumer confidence report for November, with the index partly expected to rise, partly reflecting subsiding worries stoked by the government shutdown last month.
Dollar strength had pushed the ICE index higher Monday after Tehran agreed to curb its nuclear program in exchange for relief from Western economic sanctions that U.S. officials believe will provide between $6 billion to $7 billion in foreign exchange to Iran over the next six months.
But reversing course Tuesday, the euro rose against the dollar, buying $1.3531 from $1.3518, and against the Swiss franc , the greenback traded at 0.9107 franc, down from 0.9116 franc late Monday.
While the dollar rallied against most currencies of the Group of 10 major economies on Monday, it trailed some emerging-market currencies, and the “price action displayed an interesting shift away from the monetary-policy outlook towards broader macro trends related to the sensitivity to oil prices,” said Crédit Agricole forex strategist Mark McCormick in a note Tuesday.
Oil prices retreated Monday, indicating investors were assessing the possible return of Iranian crude supplies to the world market. McCormick said reaction among oil-price sensitive currencies “may offer a script for long-term trends in FX rates if commodity prices continue to trend lower.”
The Norwegian krone, the Mexican peso, the Canadian dollar and the Russian ruble — currencies of countries that are commodity exporters — were the weakest performers Monday, he said, while the rupee and the lira of commodity importers India and Turkey, respectively, pushed higher.
For the ICE dollar index, “long-term set-ups … are looking good,” IndiaNivesh Research strategies and fund manager Dharmesh Kant wrote in a note Monday. A break above the 84 level on a weekly closing basis “is required for a new positional bull run to begin in dollar index. The likely upside then would be around 89 levels.”
Against the Japanese yen Tuesday, the dollar rose to ¥101.51 from ¥101.47, holding to levels not seen in six months. The Australian dollar , however, bought 91.84 U.S. cents, up from 91.61 U.S. cents.
The British pound was steady at $1.6154 from late Monday.
Source : Marketwatch
