BCN-04 Asian dealers resume dollar-selling after Trump rally

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Asian dealers resume dollar-selling after Trump rally

HONG KONG, Jan 26, 2018 (BSS/AFP) – The dollar edged back down in Asian
trade Friday as a Donald Trump-inspired surge petered out with analysts
tipping the US unit to continue weakening.

The recovery in the greenback helped Tokyo’s Nikkei recover some of the
past two day’s sharp losses while Hong Kong also bounced back from Thursday’s
sharp sell-off but other regional equity markets were mixed.

Forex markets have been on a roller-coaster ride the past few days after
Treasury Secretary Steven Mnuchin sent the dollar spiralling to multi-year
lows by saying at the Davos meeting of business and political leaders that a
weaker unit was “good for us”.

That came as Commerce Secretary Wilbur Ross defended this week’s stinging
US tariffs on solar panels and warned of further retaliation against nations
Washington felt had broken the rules, ramping up fears of a possible global
trade war.

Traders rushed back into the greenback, though, after Trump, who arrived
at the Swiss resort on Thursday, restated traditional US policy of favouring
a strong dollar and said Mnuchin’s comments were taken out of context.

“You tend not get too many comments on the dollar’s value from either
treasury secretaries or presidents; it’s a rare event,” Shahab Jalinoos,
global head of foreign-exchange strategy at Credit Suisse, told Bloomberg
News.

“So the market tends to pay attention when they do happen. The market can
easily imagine the idea that this White House might well change its stance on
the currency.”

However, the recovery soon faded and dollar selling resumed, with the euro
heading back to its three-year highs, helped by European Central Bank boss
Mario Draghi showing little concern about the effect of a stronger unit on
the eurozone.

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– Weaker narrative –

But Draghi did voice concern over the “volatility” in currency markets. He
spoke after the ECB left its bond-buying stimulus for the eurozone in place.

Stephen Innes, head of Asia-Pacific trading at OANDA, tipped the greenback
to continue falling owing to Trump’s desire to help US manufacturers and
exporters as part of his America First policy.

“It’s obvious to anyone that the US administration trade policy would
benefit from the weaker dollar policy, but I suspect Trump’s latest …
comments are more about optics and little more than a case of temporarily
taming the dollar bear ahead of his Davos speech” on Friday, he said.

“The weaker dollar narrative remains intact for 2018.”

While the yen edged back up, it was still off the levels below 109 against
the dollar seen in Asia on Thursday, and that game some support to the
Nikkei, which ended the morning session 0.2 percent higher.

Hong Kong rose 0.8 percent after sinking almost one percent on profit-
taking, while Shanghai and Seoul each added 0.1 percent. Jakarta and Kuala
Lumpur also rose while Singapore was flat but Wellington, Taipei and Manila
retreated.

Sydney was closed for a public holiday.

– Key figures around 0250 GMT –

Euro/dollar: UP at $1.2422 from $1.2393 at 2200 GMT

Pound/dollar: UP at $1.4180 from $1.4143

Dollar/yen: DOWN at 109.40 yen from 109.43 yen

Tokyo – Nikkei 225: UP 0.2 percent at 23,703.83 (break)

Hong Kong – Hang Seng: UP 0.8 percent at 32,905.09

Shanghai – Composite: UP 0.1 percent at 3,553.09

Oil – West Texas Intermediate: DOWN 13 cents at $65.38 per barrel

Oil – Brent North Sea: DOWN 19 cents at $70.23 per barrel

New York – DOW: UP 0.5 percent at 26,392.79 (close)

London – FTSE 100: DOWN 0.4 percent at 7,615.84 (close)

BSS/AFP/HR/0930