British pounds and US dollars banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration

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  • The dollar index falls
  • The Australian dollar recovers from its overnight fall
  • Euro, pound, australian dollar rising

LONDON, Feb 1 (Reuters) – The dollar fell again on Tuesday as risk-sensitive currencies such as the pound rose and the Australian dollar recovered from an overnight slide.

After falling nearly 5% in January, global equities entered a slightly stronger February and currency markets also reversed course. After hitting a 19-month high last week, the US dollar index fell on Monday and Tuesday was down 0.3% on the day at 96.395 at 0811 GMT.

The change follows mild caution from four U.S. Federal Reserve policymakers about the number of interest rate hikes that will follow an expected first in March. Read more

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The dollar also fell against the Japanese yen, the pair at 114.990.

The Australian dollar fell sharply overnight after the Reserve Bank of Australia (RBA) postponed expectations of near-term rate hikes until inflation was higher. Read more

But the “risky” tone in the markets meant the Australian dollar rallied quickly and rose 0.3% on the day to $0.70895 at the start of European trading.

“Market participants expecting a first rate hike early in the second quarter might have been disappointed,” Commerzbank FX and EM analyst You-Na Park-Heger said in a note to clients.

“However, a first rate step is only fully priced in for mid-year and this seems entirely possible after the RBA’s comments today. This makes today’s RBA decision neutral to slightly negative for the AUD.”

The British pound rose 0.2% to $1.34765. Prime Minister Boris Johnson has faced fresh calls to step down after a report into rallies at his offices and residence during the lockdown revealed “serious failures of leadership”. Read more

UK house price growth accelerated in January, marking the best start to the year since 2005, mortgage lender Nationwide said. Read more

The euro was up 0.2% on the day at $1.2585.

Investors are also betting on rate hikes from the European Central Bank this year, despite its ultra-loose monetary policy. Read more

German inflation data on Monday was well above expectations, with consumer prices rising 5.1% year-on-year in January from 5.7% in December. Read more

Eurozone inflation data is due on Wednesday.

“If Eurozone inflation data also surprises on the upside tomorrow, the market could be betting on a more hawkish ECB. This means the euro could find additional support heading into Thursday’s meeting,” said Park-Heger of Commerzbank.

Business confidence surveys are expected to be released until Tuesday morning. Spanish factory activity rose in January for the twelfth consecutive month, despite continuing problems with supply chains and price pressures.

Japan’s manufacturing activity grew at the fastest pace in nearly eight years. Read more

The Russian ruble returned to its highest level since January 24 against the dollar. It fell to a 15-month low last week, battered by tensions between Moscow and the West over Ukraine. Read more

In cryptocurrencies, bitcoin rose 0.2% to around $38,576, still well below November’s all-time high of $69,000. .

India’s finance minister said the central bank will introduce a digital currency in the next fiscal year, using blockchain technology. Read more

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Reporting by Elizabeth Howcroft; Editing by Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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