US dollar slips to 4-week low

London

THE dollar slipped to a four-week low against a basket of currencies on Thursday, kept under pressure by a recent dip in US 10-year bond yields, while volatile bitcoin came under renewed pressure after a 30 per cent fall in less than two weeks.

The dollar index, which measures the greenback against a basket of six major currencies, slipped as much as half a per cent on Thursday to its weakest since Dec 1.

The US currency has dropped more than 9 per cent this year, putting it on track for its biggest annual slide since 2003 . The dollar had started the year on a high, hitting its strongest in 14 years on hopes that new US president Donald Trump would implement pro-growth, pro-inflation measures.

But it has fallen on worries that Mr Trump would not succeed in pushing through those policies, and as other countries' central banks have moved towards tightening monetary conditions, lessening the divergence between the US Federal Reserve's policy and the rest of the world.

The Republican-controlled US House of Representatives gave final approval this month to the biggest overhaul of the US tax code in 30 years, which gave the dollar some support, but markets are not confident that the tax reform will feed through quickly into increased consumer confidence.

"The partisan way in which the (tax) legislation was pushed through Congress is likely to make consumers a bit sceptical about the impact on the economy," said MUFG macro strategist Derek Halpenny, in London. "It's going to be a while before consumers become convinced there is something beneficial in it."

The US 10-year Treasury yield stood at 2.437 per cent after its biggest one-day fall in almost four months on Wednesday.

"The flattening of the US yield curve is highlighting the fact that the market is not getting too enthusiastic about growth prospects for 2018, despite the tax reform legislation being signed," added Mr Halpenny.

The euro rose almost half a per cent to US$1.1946, its highest in a month. The single currency has gained more than 13 per cent so far this year, well on the way to its best annual performance since 2003.

Sterling also benefited from the dollar's weakness on Thursday, gaining as much as half a percent to hit a two-week high of US$1.3456.

The pound is on track for its best year against the dollar since 2009, with a more than 9 per cent climb, though it is still down more than 10 per cent since last year's vote in Britain to leave the European Union. REUTERS