Dollar regains traction as safe-haven yen and chf fall on improved risk appetite

Market Review - 19/08/2019  23:38GMT  

Dollar regains traction as safe-haven yen and chf fall on improved risk appetite

The greenback pared initial losses made in Asia and European morning and ended higher across the board on Monday as risk sentiment improved due to speculation that central banks will launch stimulus measure to boost global growth. Dollar gained further buying interest in New York trading after Boston Fed President Eric Rosengren downplayed the need for more interest rate cut.  
  
Reuters reported in New York afternoon Boston Federal Reserve Bank President Eric Rosengren on Monday said U.S. economic conditions are still good and that lowering interest rates could encourage a worrying buildup in debt.   "The lower interest rates are, the more you're encouraging people to take on more debt. And is this the right stage in the cycle for us to encourage people to be taking on more debt?" he said in an interview broadcast on Bloomberg Television, adding that doing so could worsen the next downturn.   Rosengren was one of two dissenting voters at the U.S. central bank on its decision last month to cut borrowing costs for the first time since 2008.   
  
Versus the Japanese yen, although price gained to 106.48 in New Zealand, price retreated to 106.25 in Asian morning. However, dollar found renewed buying there and rose to an intra-day high at 106.69 ahead of New York open due partly to rising U.S. yields before retreating to 106.46 in New York morning but only to rebound back to 106.66 near the close following Fed Rosengren's remarks.  
  
The single currency traded sideways in Asia after Friday's rebound on report that Germany may be open to ditching its budget balance rule, price briefly gained to session highs at 1.1113 in European morning. However, euro erased its gains and tumbled to an intra-day low at 1.1077 in New York afternoon due to renewed usd's strength on Fed's Rosengren Fed rate comments.  
  
Although the British pound gained from Asian low at 1.2140 to session highs at 1.2172 at European open, price erased its gains and tumbled to an intra-day low at 1.2105 ahead of New York open due partly to cross-selling in sterling especially vs euro. Cable then staged a strong rebound to 1.2158 in New York morning on renewd cross-buying in sterling but only to retreat in tandem with euro to 1.2125 near the close on broad-based usd's strength.  
  
Reuters reported Prime Minister Boris Johnson on Monday called on Germany and France to compromise on Brexit, cautioning that the United Kingdom would be ready to leave the European Union without a deal on Oct. 31 if necessary.  "We will be ready to come out on Oct. 31 - deal or no deal," Johnson told reporters. "Of course, our friends and partners on the other side of the Channel are showing a little bit of reluctance to change their position - that's fine - I am confident that they will."    
When asked what his visit later this week to Berlin and Paris would achieve, Johnson said: "I hope that they will compromise - they have seen that the UK parliament has three times rejected the Withdrawal Agreement, the backstop just doesn't work, it is not democratic. I hope they will see fit to compromise."  
  
In other news, Reuters reported U.S. President Donald Trump said on Monday the Federal Reserve should consider cutting interest rates by 1 percentage point and advocated "some quantitative easing" as he continued his pressure campaign on the central bank.   "The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well," Trump said in a Twitter post in which he also lamented that the U.S. dollar is so strong that "it is sadly hurting other parts of the world."   
  
Data to be released Tuesday:  
  
Germany PPI, Swiss trade balance, exports, imports, EU construction output, UK CBI trend order, Canada manufacturing sales and U.S. redbook, Philadelphia Fed non-manufacturing business outlook survey.