US dollar losses mount as data douse rate hike talk

[TOKYO] The US dollar extended losses on Friday in Asia as investors bet against a September Federal Reserve interest rate hike following another weak batch of US data.

The greenback drew some support over the week following comments from Fed officials hinting that the policy board could lift borrowing costs at next week's meeting.

But the chances of such a move were dampened Thursday by the release of figures showing retail sales fell last month and wholesale inflation remained tepid, while industrial production also disappointed.

And Stephen Innes, senior trader at forex firm Oanda, said the probability of a December hike had fallen to below 50 per cent.

The dollar sank to 101.78 yen at one point Friday in Tokyo, down from 102.10 yen in New York, where is fell from 102.28 yen earlier Thursday in Asia. The euro was at US$1.1242 from US$1.1244 in US trade but up from US$1.1235 earlier Thursday.

The euro also bought 114.74 yen against 114.81 yen.

The greenback also fell 0.6 per cent against the Australian dollar and South Korean won, while it lost 0.4 per cent against Indonesia's rupiah and Malaysia's ringgit.

The dollar has also come under pressure as traders fret over reports that the Bank of Japan will consider at its own policy meeting next week to cut borrowing costs deeper into negative territory.

While such a move would usually hit the yen, the uncertainty about the effects of it have spooked traders, sending them rushing to the safe haven of the yen.

"Indeed, the market is more anxious about the BoJ decision rather than the Fed decision, which at this stage is all but priced out for a September rate hike," Mr Innes said.

"There's a growing consensus that the BoJ will refrain from (cutting rates deeper) this meeting, but will keep all options open for November and will forward guide that choice at next week's meeting."

AFP