Dollar hovers near one-week low as Evergrande questions persist

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TOKYO (Reuters) – The dollar hovered above a one-week low against its major peers on Friday, taking a break from its biggest drop in nearly a month overnight, as questions lingered about the fate of ailing real estate giant China Evergrande Group.

FILE PHOTO: US dollar banknotes can be seen in this photo illustration taken on February 12, 2018. REUTERS / Jose Luis Gonzalez / Illustration / File Photo

The yen fell to its lowest since mid-August as Treasury yields hit their highest level since early July.

The dollar index, which measures the greenback against a basket of six rivals, rose 0.04% to 93.142 after slipping 0.36% on Thursday and touching its lowest since Sept. 17 at 92.977. That erased the gains for the week and set the index down 0.09%.

The safe haven dollar was hit after Beijing pumped fresh money into the financial system on Thursday, when Evergrande announced it would pay interest on an onshore bond.

However, some holders of its offshore bonds said they did not receive coupons by Thursday’s deadline. More dollar bond interest is due next week.

The dollar gained 0.14% to 110.48 yen and touched 110.49 for the first time since August 12, as benchmark US Treasury yields climbed to 1.452% in Tokyo, an all-time high. seen since July 2.

The Bank of England’s (BOE) hawkish comments on Thursday pushed yields up globally, a day after the US Federal Reserve said it could start cutting monthly bond purchases as early as November and that interest rates could rise faster than expected over the next year.

The BOE said two of its policymakers voted to end government bond purchases early in the era of the pandemic and that markets have raised their expectations for an interest rate hike to March.

The British pound was little changed at $ 1.3717 after rising to $ 1.3750 overnight for the first time since September 20.

The euro was also broadly flat at $ 1.1740, after recovering from a more than a month low of $ 1.16835 reached on Thursday.

The risk-sensitive Australian dollar was little changed at $ 0.7296 after hitting a one-week high at $ 0.73165.

Westpac expects the dollar index to stagnate at slightly higher at the end of the year, but remain within a range of 92.0 to 93.5 in the near term.

“The clear signal to cut from the Fed and the gradual advance of rate hike plans, not to mention the lingering uncertainty around Evergrande, should contain the downsides,” Westpac strategists wrote in a report.

Meanwhile, the National Australia Bank said a sharp drop in dollar sentiment would be needed to meet its year-end target of 89.6 for the dollar index, “and there is no obvious short-term triggers “for this, the strategists wrote in a research note.

Several Fed officials are scheduled to speak on Friday, including President Jerome Powell, who will deliver opening remarks at a Fed Listens event.

Reporting by Kevin Buckland; Editing by Christopher Cushing


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