The United States of America Dollar powered to an 11-month high in the currency market,on Thursday, June 21, maintaining pressure on inflation and on countries and firms that have gorged themselves on dollar-denominated debt in recent years.
The dollar’s latest spurt softened safe-havens such as the yen, with the dollar adding 0.31 percent to 110.71 yen JPY=.
It added 0.45 percent against a basket of currencies to 95.484 .DXY, hitting an 11-month top and sending the euro EUR= down to a three-week low of $1.1500.
“The reaction of the dollar has been very interesting this week,” said State Street Global Markets head of macro strategy Michael Metcalfe.
“In previous periods this year fears of a trade war have been dollar negative, but that has been different this week in the sense that we have had this potential escalation in the trade war and it has rallied.”
The mere absence of new threats from U.S President Donald Trump on tariffs was nevertheless enough to keep hopes alive that all the bluster was a ploy which would stop short of an outright trade war.
Markets had also been encouraged by the People’s Bank of China’s move to set firm fixings for its yuan, along with the addition of extra liquidity.
There was also much speculation the central bank would cut bank reserve requirements, thus boosting lending power in the economy.
On Wall Street on Wednesday, resilience in tech stocks helped the Nasdaq to an all-time high, though the moves were modest. While the Dow Jones .DJI fell 0.17 percent, the S&P 500 .SPX gained 0.17 percent and the Nasdaq .IXIC 0.72 percent.
Sterling GBP=D4 was at seven-month low of $1.3116 meanwhile, having made only a fleeting bounce after Prime Minister Theresa May won another crucial Brexit vote in parliament,Reuters reports.
The Bank of England holds a policy meeting later in the session but not a single analyst polled by Reuters expects a rate hike and some are getting cold feet about a rise in August given recent soft economic data.
While the European Central Bank has signaled an end to bond-buying it also pledged to keep rates low past next summer, while the Bank of Japan shows no sign of winding back its stimulus.
