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US dollar edges down, sterling steadies after traumatic month
[TOKYO] The US dollar took a breather in Asia on Thursday but remained near a 3-1/2-month high against a basket of currencies hit in the wake of Britain's stunning vote to exit from the European Union, while recently battered sterling crawled higher.
The US dollar index, which tracks the greenback against a basket of six major rivals, edged down 0.1 per cent to 95.642 , on track for a monthly loss of 0.2 per cent.
It rose as high as 96.705 on Monday, when the pound plumbed 31-year lows after the results of the UK vote on Friday sent markets reeling.
Sterling was up 0.3 per cent at US$1.3456, well above Monday's nadir of US$1.3122 but still poised to lose more than 7 per cent for the month.
The euro was down 0.2 per cent at 82.67 pence edging away from Monday's high of 83.80, which was its loftiest peak in over than two years.
"The odds may be against them but investors are hoping that the worse is over for currencies and equities and the gaps on Friday will be filled," Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in a note to clients.
"But considering there's been had no additional clarity on the terms of Brexit or the outlook for the UK economy and global economy since Britain's decision to leave the European Union on Friday, we don't see fundamental support for the recent moves," she said.
Chaos also continued in Britain's political arena, as both main opposition Labour Party and ruling Conservative Party headed for leadership battles.
The euro remained under pressure, down 0.1 per cent at US$1.1116, but remained well above its 3 1/2-month low of US$1.0912 hit on Friday last week and down only 0.1 per cent for the month.
Against its perceived safe-haven Japanese counterpart, the US dollar edged down 0.1 per cent to 102.72 yen, well above its 2-1/2-year low of 99.00 hit in volatile trade on Friday.
It was still on track to shed more than 7 per cent for the month.
The yen tends to appreciate sharply in times of global risk, creating headaches for the Japanese government and threatening to push the country back into recession.
Data released earlier in the session showed that Japan's industrial output fell in May at the fastest rate in three months, highlighting concerns about falling exports and doubts about weak consumer spending.