The dollar rose on Thursday, on track to post a fourth straight month of gains, as the trade stand-off between China and the United States prompted traders to put money into perceived safe currencies including the greenback.
Safe-haven demand lifted the dollar to a two-year high against a basket of currencies last week. Appetite for the greenback was somewhat curbed on Thursday as Wall Street stabilized following steep losses due to the trade worries.
The euro and sterling holding above key support levels at $1.11 and $1.26, respectively, also restrained the greenback’s momentum, analysts said.
“The dollar is getting tired at these levels,” said Dean Popplewell, chief currency strategist at Oanda. “Some people want to take off some of these positions before June.”
At 10:53 a.m. (1453 GMT), an index that tracks the dollar against six major currencies was up 0.1% at 98.246. It reached 98.371 a week ago, marking its strongest level since May 2017.
The S&P 500 was up 0.45%, while benchmark 10-year Treasury yields was 2.8 basis points higher at 2.264%.
The dollar index has increased 0.76% in May, putting it on track for four straight months of gains.
The greenback will likely extend its monthly winning streak against the euro, which began in January.
Signs of a sagging euro zone economy, together with worries about the rise of euro-sceptic political parties within member countries, have hurt the single currency.
The euro was 0.07% down at $1.1123, within striking distance of $1.11055 hit a week ago, which was a two-year low.
The dollar has also remained resilient against the yen, despite the risk averse environment.
The greenback was 0.21% higher at 109.82 yen, rebounding from a two-week low on Wednesday.
Analysts said the yen, a safe-haven currency backed by Japan’s status as the world’s biggest creditor nation, remained relatively weak because of domestic demand for dollars.
“As there’s persistent yen-selling and dollar-buying from Japanese investors when the rate approaches the 109.10 yen per dollar level, it’s not easy for the yen to rise above the 109 level,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
Sterling was poised for the biggest monthly drop against the dollar in a year as the imminent departure of Theresa May as prime minister deepened fears about a chaotic exit for Britain from the European Union.
On Thursday, the pound was 0.34% higher at $1.258, while the euro was up 0.24% at 88.37 pence.
Source: Reuters
