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Dollar rebounds

FOREX_News-dollar-rebounds_FXPIG

The dollar rebounded in Thursday’s trade after a Chinese regulator blasted a report that Beijing will scale back its U.S. bond purchases as “fake news.”

The greenback posted the biggest gains against the Canadian dollar and Mexican peso, building on gains from Wednesday when concerns emerged that the U.S. may withdraw from the Nafta trade pact as early as this month.

What are currencies doing?

The ICE U.S. Dollar Index DXY, +0.08%  , which measures the buck against a basket of six rivals, rose 0.2% to 92.467, snapping back after posting its first loss in four days on Wednesday.

Meanwhile, the WSJ Dollar Index BUXX, +0.02%  , which gauges the greenback against a basket of 16 currencies, rose 0.1% to 85.86.

The euro EURUSD, -0.0084%  dropped to $1.1940 from $1.1949 late Wednesday in New York.

The pound GBPUSD, -0.0962%  traded hands at $1.3484, down from $1.3508 on Wednesday.

The dollar continued to rise against the Canadian dollar USDCAD, +0.0877%  and Mexican peso, adding to gains from Wednesday when those currencies were sent into a tailspin by a report that Canada is increasingly convinced the U.S. will pull out of Nafta.

A dollar bought C$1.2580 on Thursday, compared with C$1.2547 late Wednesday, and fetched 19.3328 pesos, up from 19.2843 pesos.

The yen also declined against the dollar, with the U.S. currency USDJPY, +0.17% buying ¥111.62 compared with ¥111.43 on Wednesday.

What’s driving the market?

The dollar posted broad-based gains after China’s foreign-exchange regulator on Thursday pushed back on a Bloomberg report that government officials were recommending China should to pare back or even halt purchases of U.S. Treasurys.

A spokesperson for the State Administration of Foreign Exchange (SAFE) said in a statement published on its Chinese website, that the “news may quote the wrong source of information, or it may be fake news.”

On Wednesday, Bloomberg, citing unidentified people familiar with the matter, said China found that U.S. bonds were becoming less attractive and that trade tensions with the U.S. could provide a reason to stop buying American government paper. The report sparked a selloff in U.S. bonds that sent 10-year Treasury yieldsTMUBMUSD10Y, -0.61%  higher, close to 2.6%, and pushed the dollar lower against most other major currencies.

Higher yields are usually seen as a positive for the dollar, but investors reacted differently to the report on Wednesday. That’s because slower or no Chinese bond buying would overall weaken demand for the greenback, making it less attractive to investors.

U.S. yields reversed on Thursday, falling 2 basis points to 2.5362%.

What else is in focus on Thursday?

U.S. weekly jobless claims and the producer-price index for December are due at 8:30 a.m. Eastern Time. At 2 p.m. Eastern, the federal budget for December is due.

Source:marketwatch.com

The dollar rebounded in Thursday’s trade after a Chinese regulator blasted a report that Beijing will scale back its U.S. bond purchases as “fake news.”

The greenback posted the biggest gains against the Canadian dollar and Mexican peso, building on gains from Wednesday when concerns emerged that the U.S. may withdraw from the Nafta trade pact as early as this month.

What are currencies doing?

The ICE U.S. Dollar Index DXY, +0.08%  , which measures the buck against a basket of six rivals, rose 0.2% to 92.467, snapping back after posting its first loss in four days on Wednesday.

Meanwhile, the WSJ Dollar Index BUXX, +0.02%  , which gauges the greenback against a basket of 16 currencies, rose 0.1% to 85.86.

The euro EURUSD, -0.0084%  dropped to $1.1940 from $1.1949 late Wednesday in New York.

The pound GBPUSD, -0.0962%  traded hands at $1.3484, down from $1.3508 on Wednesday.

The dollar continued to rise against the Canadian dollar USDCAD, +0.0877%  and Mexican peso, adding to gains from Wednesday when those currencies were sent into a tailspin by a report that Canada is increasingly convinced the U.S. will pull out of Nafta.

A dollar bought C$1.2580 on Thursday, compared with C$1.2547 late Wednesday, and fetched 19.3328 pesos, up from 19.2843 pesos.

The yen also declined against the dollar, with the U.S. currency USDJPY, +0.17% buying ¥111.62 compared with ¥111.43 on Wednesday.

What’s driving the market?

The dollar posted broad-based gains after China’s foreign-exchange regulator on Thursday pushed back on a Bloomberg report that government officials were recommending China should to pare back or even halt purchases of U.S. Treasurys.

A spokesperson for the State Administration of Foreign Exchange (SAFE) said in a statement published on its Chinese website, that the “news may quote the wrong source of information, or it may be fake news.”

On Wednesday, Bloomberg, citing unidentified people familiar with the matter, said China found that U.S. bonds were becoming less attractive and that trade tensions with the U.S. could provide a reason to stop buying American government paper. The report sparked a selloff in U.S. bonds that sent 10-year Treasury yieldsTMUBMUSD10Y, -0.61%  higher, close to 2.6%, and pushed the dollar lower against most other major currencies.

Higher yields are usually seen as a positive for the dollar, but investors reacted differently to the report on Wednesday. That’s because slower or no Chinese bond buying would overall weaken demand for the greenback, making it less attractive to investors.

U.S. yields reversed on Thursday, falling 2 basis points to 2.5362%.

What else is in focus on Thursday?

U.S. weekly jobless claims and the producer-price index for December are due at 8:30 a.m. Eastern Time. At 2 p.m. Eastern, the federal budget for December is due.

Source:marketwatch.com

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