Skip to main content ↑ ↓
Topic: Dollar dips as UK budget U-turn improves market sentiment (Read 31 times) previous topic - next topic

Dollar dips as UK budget U-turn improves market sentiment

Dollar dips as UK budget U-turn improves market sentiment

[html]By Karen Brettell NEW YORK (Reuters) – The dollar dipped against a basket of major currencies and sterling jumped on Monday after…
                              

By Karen Brettell


NEW YORK (Reuters) –     The dollar dipped against a basket of major currencies and sterling jumped on Monday after Britain’s new finance minister ditched most of the government’s “mini-budget,” sparking a rally in U.K. and U.S. government bonds and reducing demand for the safe-haven U.S. currency.


Jeremy Hunt, who was appointed finance minister by Prime Minister Liz Truss on Friday, reversed large swathes of the 45-billion pound “mini-budget” that sparked unprecedented market turmoil in which the pound hit record lows and the Bank of England was forced to intervene.


“The pound has been the driver of the FX market this month so far, and the big change the UK government has announced has restored faith in the pound and taken the bid on the U.S. dollar out,” said Adam Button, chief currency analyst at ForexLive.


British gilts rallied sharply after the news, helping to also send U.S. Treasury yields lower.


Hunt replaced Kwasi Kwarteng, whose package of unfunded tax cuts on Sept. 23 unleashed a bond market sell-off.


“For now, the market seems happy to give the new chancellor time and space to put the government’s house back in order,” said Chris Beauchamp, chief market analyst at IG.


Sterling was last up 1.57% at $1.1349. The dollar index against a basket of currencies fell 0.50% to 112.46. The euro gained 0.69% against the greenback.


Risk sentiment also improved after Bank of America reported a smaller-than-expected drop in quarterly profit and said that its U.S. consumer client spending remained strong, even if it was slowing.


Traders are also on watch for any intervention from the Bank of Japan after the yen fell to a 32-year low.


The Japanese currency earlier reached 148.84, before last trading at 148.75.


Japan last month intervened to buy the yen for the first time since 1998, after the Bank of Japan stuck to its policy of maintaining ultra-low interest rates, which has battered the currency this year.


Japanese authorities kept up their warnings to the market on Monday of a firm response to overly rapid yen declines, after last week’s fall and meetings of global financial leaders that acknowledged currency volatility.


========================================================


Currency bid prices at 10:02AM (1402 GMT)


           Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid         


                                                       Previous                   Change                             


                                                       Session                                                       


           Dollar index                 112.4600       113.0500    -0.50%         17.559%       +113.2000   +112.3600         


           Euro/Dollar                  $0.9789        $0.9723     +0.69%         -13.88%       +$0.9798    +$0.9715         


           Dollar/Yen                   148.7500       148.7850    -0.03%         +29.20%       +148.8900   +148.4000         


           Euro/Yen                     145.59         144.65      +0.65%         +11.72%       +145.6600   +144.4200         


           Dollar/Swiss                 0.9972         1.0053      -0.81%         +9.32%        +1.0045     +0.9956         


           Sterling/Dollar              $1.1349        $1.1178     +1.57%         -16.05%       +$1.1367    +$1.1175         


           Dollar/Canadian              1.3737         1.3881      -1.03%         +8.66%        +1.3878     +1.3714         


           Aussie/Dollar                $0.6280        $0.6203     +1.21%         -13.63%       +$0.6293    +$0.6208         


           Euro/Swiss                   0.9759         0.9774      -0.15%         -5.88%        +0.9786     +0.9743         


           Euro/Sterling                0.8622         0.8692      -0.81%         +2.64%        +0.8686     +0.8614         


           NZ                           $0.5633        $0.5562     +1.29%         -17.69%       +$0.5641    +$0.5553         


           Dollar/Dollar                                                                                             


           Dollar/Norway                10.5380        10.6750     -1.19%         +19.73%       +10.6700    +10.5080         


           Euro/Norway                  10.3160        10.3921     -0.73%         +3.03%        +10.4031    +10.2918         


           Dollar/Sweden                11.2017        11.2994     -0.01%         +24.22%       +11.3305    +11.1913         


           Euro/Sweden                  10.9662        10.9676     -0.01%         +7.15%        +11.0142    +10.9580         



(Additional reporting by Amanda Cooper in London; Editing by Paul Simao)


tagreuters.c**2022binary_LYNXMPEI9G01G-BASEIMAGE

[/html]

Source: Dollar dips as UK budget U-turn improves market sentiment (http://ht**://www.oann.c**/business/dollar-dips-as-uk/?utm_source=rss&utm_medium=rss&utm_campaign=dollar-dips-as-uk)