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US dollar near 1-month high on bounce in US yields, weak pound

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The US dollar held near a one-month high against its peers on Wednesday, supported by a rebound in US yields and weakness of the pound as its battering from uncertainty about Brexit continued.

[TOKYO] The US dollar held near a one-month high against its peers on Wednesday, supported by a rebound in US yields and weakness of the pound as its battering from uncertainty about Brexit continued.

The greenback was lifted as long-term US Treasury yields bounced from three-month lows.

The US dollar index versus a basket of six major currencies stood at 97.420 after rising overnight to 97.545, its highest since Nov 13.

"In addition to higher Treasury yields, the weakening pound is providing a key boost to the dollar," said Yukio Ishizuki, senior forex strategist at Daiwa Securities in Tokyo.

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Market voices on:

"With Brexit talks seemingly headed towards a dead end, this has been a golden opportunity for speculative market players to short the pound."

Sterling took a big hit at the start of this week after British Prime Minister Theresa May delayed a parliamentary vote on her Brexit deal.

The pound suffered further on Tuesday on media reports that May's parliamentary colleagues believed they had sufficient numbers to mount a no-confidence vote in her leadership.

The British currency was little changed at US$1.2495 after dropping to US$1.2480 overnight, its weakest since April 2017. The currency has lost 1.8 per cent this week.

The euro was a shade higher at US$1.1333 after shedding 0.3 per cent the previous day.

The US dollar was a shade higher at 113.49 after touching a one-week peak of 113.52.

China's yuan was firmer in offshore trade at 6.886 to the US dollar, extending gains from the previous day.

The yuan firmed on Tuesday on news that Beijing and Washington were discussing the next steps in their trade talks.

US President Donald Trump on Tuesday told Reuters he would intervene in the Justice Department's case against a top executive at China's Huawei Technologies if it would serve national security interests or help close a trade deal with China.

The Australian dollar, a gauge of broader risk sentiment, was up 0.35 per cent at US$0.7228.

The 10-year Treasury note yield inched up to 2.889 per cent after rising more than two basis points on Tuesday.

The yield had dropped to a three-month low of 2.825 per cent at the start of the week, with dovish comments from Fed officials and soft US data further reinforcing views of a slowdown in the tightening cycle. 

REUTERS