LONDON, Nov 1 — The euro held its gains against the dollar today as investors sold the US currency, expecting the United States will soon join the global economic slowdown.
The dollar and the Japanese yen, both seen as safe-haven investments, appreciated equally each time the United States looked deadlocked in its trade dispute with China.
But the dollar is losing that status, after poor US economic data. Investors do not share the Federal Reserve’s confidence in the economic outlook because of the risks posed by the trade war, which contributed to declines by the dollar and US Treasury yields.
Traders were looking to a US employment report, which was expected to show job creation has slowed, highlighting concerns about the health of the world’s largest economy.
The Fed cut interest rates this week for the third time this year, but it indicated further cuts were unlikely, citing pockets of strength in the US economy.
The euro was last up 0.1 per cent at US$1.1165 (RM4.65), close to a 10-day high.
The dollar also lost against the yen, last trading at 107.89 yen, a three-week low, after Bloomberg reported that Chinese officials have doubts about reaching a comprehensive solution to the US-Sino trade war. The US currency is headed for a 0.6 per cent decline against the yen this week, its biggest weekly loss since October 4.
“Following the Fed rate meeting, the market not only feels confirmed in its rate cut expectations, it has even raised them,” Commerzbank analysts said in a note to clients, citing the reports of Chinese doubts about a trade deal.
“The ISM index and the US labour market report today will be decisive for whether the economic pessimism about the US and thus the rate cut expectations as well as dollar weakness will continue short term,” the analysts said.
Forecasts are the US economy created 89,000 new jobs in October, fewer than the 136,000 created in September, according to a Reuters poll. An ISM manufacturing PMI reading, however, is expected to rise to 48.9 in October from 47.8 in September.
Elsewhere, the New Zealand dollar jumped to a seven-week high of 0.6443 against the dollar, and was last up 0.4 per cent at 0.6436.
The pound rose 0.3 per cent to US$1.2973, poised for a one per cent weekly gain. Sterling was quoted at 86.09 pence per euro, headed for a 0.2 per cent rise this week.
Sterling has found support as the threat of Britain crashing out of the European Union without an agreement on trade and borders begins to fade. — Reuters
