Friday, 29th March 2024
To guardian.ng
Search

Dollar slips as US data lower rate hike expectations

The dollar extended its losses against the yen and euro Tuesday as fresh data indicating a slowdown in the US manufacturing sector lowered expectations the Federal Reserve will hike interest rates any time soon.
PHOTO:AFP

PHOTO:AFP

The dollar extended its losses against the yen and euro Tuesday as fresh data indicating a slowdown in the US manufacturing sector lowered expectations the Federal Reserve will hike interest rates any time soon.

The greenback was already under pressure against the yen after the Bank of Japan on Thursday refused to expand its stimulus programme despite a string of weak economic indicators and two deadly earthquakes that closed factories.

On Monday a closely watched gauge of US factories for April showed the rate of growth eased, leading to concerns about the state of the world’s number one economy.

That came after data last week showed consumer spending rose only slightly in April, while the economy expanded slower than expected in the first three months of the year.

The readings mean it is highly unlikely the Fed will hike interest rates at its June policy meeting, while some analysts say September would be the earliest, if at all this year.

On Tuesday in Asia the dollar fell to 105.79 yen. The greenback is wallowing at lows not seen since October 2014.

Remarks by Japanese finance minister Taro Aso hinting at a possible market intervention to staunch the yen’s rise seemed to have little impact.

The manufacturing figure also came after a similar gauge in the eurozone pointed to a pick-up in activity, sending the euro above $1.15 for the first time in nine months Monday. On Tuesday, the single currency was at $1.1569.

However, the dollar rallied 0.75 percent against its Australian counterpart after the country’s central bank cut interest rates to a record low after inflation last week came well below expectations.

United Overseas Bank (UOB) said focus will now turn to the release on Friday of April jobs figures, a key gauge of the health of the US economy.

UOB said the data “could swing market expectations for (the) Federal Reserve’s future course of interest rate actions”.

Trading was thin with the Japanese financial markets closed until Friday for public holidays.

The greenback has come under pressure in recent weeks after the Fed decided against hiking interest rates and stood by its stance that any further rises would be slow and small as economic growth remained relatively weak.

The South Korean won slipped 0.1 percent, the oil-reliant Malaysian ringgit fell 0.23 percent and Indonesia’s rupiah was up 0.04 percent. The Indian rupee was up 0.17 percent.

0 Comments