Dollar heads for best month since February with rebound
Send a link to a friend
[October 31, 2017]
By Jemima Kelly
LONDON (Reuters) - The dollar brushed off
news that investigators had charged U.S. President Donald Trump's former
campaign manager on Tuesday, putting it on track for its best month
It had earlier slipped to an 11-day low against the yen, as investors
turned cautious following news that Paul Manafort and another Trump
aide, Rick Gates, had been charged in a probe into Russian interference
during last year's elections.
But it recovered to trade up 0.2 percent on the day against the Japanese
currency - which is often sought at times of political or financial
uncertainty - at 113.40 yen <JPY=>.
"Markets have got used to every now and again having a bad Trump story,"
UBS Wealth Management currency strategist Constantin Bolz in Zurich,
Against a basket of major currencies, the dollar had also slipped <.DXY>,
but recovered to trade up 0.1 percent on the day and was on set for its
best month since February with a 1.5 percent climb.
The greenback has been boosted by talk that the next chair of the U.S.
Federal Reserve could take a more hawkish direction, as well as hopes
that Trump could push through tax reform plans.
It has also been lifted by weakness in the euro, which was heading for
its worst month since February after the European Central Bank's
extension of its asset purchase program.
[to top of second column]
The fact that the ECB would continue to keep policy loose for the next nine
months, Bolz said, meant that weaker-than-expected euro zone inflation data -
which showed price growth at 1.4 percent year-on-year - had little impact on the
single currency, which was trading down 0.2 percent at $1.1632 <EUR=>.
Some analysts said speculation that Fed Governor Jerome Powell was likely to
become the next Fed chair - rather than economist John Taylor, who is considered
the most hawkish of the candidates - was limiting dollar strength.
But Societe Generale strategist Kit Juckes, in London, said the main restraint
on further strength was Treasury yields.
"This is almost gravity reasserting itself," he said. "Maybe I can take politics
as the excuse, or Jerome Powell being favorite rather than John Taylor to run
the Fed, but through all of it the underlying story is that bond yields are
capped by a very low rate cycle and a lack of inflation."
The yen showed limited reaction after the Bank of Japan kept its monetary policy
steady on Tuesday, as widely expected, while slightly lowering its inflation
forecast for the current fiscal year.
(Reporting by Jemima Kelly; Additional reporting by Masayuki Kitanon in
Singapore; Editing by Larry King and Alexander Smith)
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.