Forex – U.S. Dollar Rebounds After Falling for Fourth Straight Session
The U.S. dollar rebounded on Tuesday in Asia after falling for a fourth straight session.
The U.S. Dollar Index last traded at 96.495 by 10:56 PM ET (03:56 GMT), up 0.3%.
The dollar traded lower earlier in the day after data showed the ISM non-manufacturing data for December fell to a reading of 57.6, missing expectations of 59.6. Traders are increasingly convinced the Federal Reserve will not raise interest rates this year if economic growth continues to slow, Reuters said. Some traders even expect a rate cut in 2019, it added.
The Federal Reserve in December hinted that two rate hikes were on the table this year, but Fed Chairman Powell indicated last week the central bank would be willing to rein in monetary policy tightening should the need arise.
Powell said that he was aware of economic risks and would be flexible in policy decision this year, easing concerns that the central bank might ignore recent data that suggested an economic slowdown.
“Various concerns markets had earlier are receding for now. Still, there’s no denying that the U.S. earning momentum is slowing,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
“Ultimately we need to see whether upcoming earnings reports can dispel market concerns.”
Meanwhile, the USD/CNY pair traded 0.1% higher at 6.8558 as the People’s Bank of China (PBOC) set the yuan reference rate at 6.8402 vs Monday’s fix of 6.8517.
The Japanese yen fell against the U.S. dollar as global equities recovered on Monday by hopes that Washington and Beijing may be inching towards a trade deal. The USD/JPY gained 0.2% to 108.88.
Elsewhere, the AUD/USD pair and the NZD/USD pair lost 0.3% and 0.1% respectively.