Forex Signals – Dollar nurses losses
SINGAPORE (Reuters) – The dollar teetered near milestone lows on Tuesday, after a triple blow of retreating yields, soft U.S. economic data and a dip in safe-haven demand exerted broad selling pressure.
The euro (EUR=EBS) last sat at $1.1874, just below a recent two-year high of $1.1916. The Aussie was steady at $0.7213 and close to an 18-month top of 0.$7242 hit on Aug. 7.
Net bearish bets on the U.S. dollar grew to their largest since May 2011 last week and spot trade in recent days suggest the position has only grown further since.
“Extended short dollar positions risk a sharp pull back if the dollar downside stalls further, but for now the negatives for the dollar are mostly still in place,” said analysts at Singapore’s OCBC Bank.
“We are reduced to staying in the game while the music is playing.”
On the data front the New York Fed’s Empire State business conditions index tumbled to 3.7 in August from 17.2 in July – far lower than the 15 points forecast by a Reuters survey.
Delinquency rates for residential mortgages also posted the largest quarterly increase on record.
“A high delinquency rate for an extended period can impair the banking system,” said Commonwealth Bank of Australia (OTC:CMWAY) currency analyst Joe Capurso. – Forex Signals – Dollar nurses losses
“An impaired banking system could hold back the U.S. economic recovery like it did in the aftermath of the (2008 crisis),” he said.
The Japanese yen rose back past 106-per-dollar to 105.88 after a 2.6 basis point drop in benchmark U.S. 10-year government bond yields overnight. [US/]
Against a basket of currencies (=USD) the dollar sat at an eight-session low of 92.762.
Among G10 currencies, the kiwi was the laggard as New Zealand’s largest city remains under lockdown and anticipation of future monetary easing weighs on the currency.
It last bought $0.6557 and traders said bets on the kiwi dropping had supported the Aussie as investors sought exposure to the Aussie/kiwi cross, which is trading at a two-year peak.
“The move has been one way traffic,” said Chris Weston, head of research at Melbourne broker Pepperstone, who is holding for the ride even though the pair (AUDNZD=) has hit his price target of NZ$1.10 per Aussie.