New York/London

THE US dollar edged lower against a basket of major currencies on Friday (Oct 15), on track to break its five-week winning streak, as global risk appetite rebounded, reducing demand for the safe-haven currency.

Global stock markets had rallied last week as fears about a stagflationary economy have been eased by forecast-beating corporate earnings in the United States. Unexpectedly strong US retail sales data for September also boosted sentiment. Retail sales rose 0.7 per cent last month, versus expectations of a 0.2 per cent decline, helped in part by higher prices.

"The risk appetite here remains really, really strong for the time being," said Boris Schlossberg, managing director of FX strategy at BK Asset Management. "That's helping high beta currencies like the pound, euro and Australian dollar, simply because the market is feeling more positive."

The dollar index firmed after the retail sales data, but then trended lower and was down 0.19 per cent for the week, after appreciating for the previous five weeks. The dollar was last down 0.106 per cent at 93.941, after having hit a one-year high of 94.563 on Tuesday. Sterling rose 0.69 per cent to US$1.3765, its highest since Sep 17, while the euro edged up 0.02 per cent to US$1.1601 after touching US$1.1624 on Thursday for the first time since Sep 4.

The risk-sensitive Australian dollar added 0.01 per cent to US$0.7416, having climbed to US$0.7439 earlier. New Zealand's dollar jumped 0.42 per cent to US$0.7065, extending Thursday's 1 per cent surge.

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The Japanese yen was the biggest loser, dropping to as low as 114.46 yen per dollar, its weakest since October 2018. The yen is a safe-haven currency and has been knocked by the rebound in sentiment including in Asia. The dollar was last up 0.42 per cent against the yen at 114.15 yen.

The greenback had rallied against its major peers since early September on expectations that the US central bank would tighten monetary policy sooner than previously expected amid an improving economy and surging energy prices. Minutes of the Fed's September meeting confirmed that a tapering of stimulus is all but certain to start this year, although policymakers are sharply divided over inflation and what they should do about it. REUTERS