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Date: 13.10.2014
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Dollar steady versus euro, yen amid lower US yields
The dollar steadied against the euro and
yen on Friday, though lower US yields
capped its rebound after the Federal
Reserve's dovish undertones sapped
the greenback's recent strength.
The euro was flat at $1.2695, but still
within reach of a low of $1.2664 struck
overnight after a plunge in German ex­
ports raised fears of a recession in Eu­
rope's largest economy and reinforced
a case for more action by the European
Debt markets have recently been
pushing out the timing of a likely Fed
rate increase further into 2015 amid
worries about slowing global growth
and a general lack of inflationary pres­
sure in the major economies.
All of that has made markets much
more jittery, as seen in a jump in the
CBOE volatility index, a measure of in­
vestor anxiety, to highs not seen since
early February. Analysts said the pick­
Central Bank.
up in volatility means the dollar's road
The dollar was little changed at
higher is likely to get bumpier.
107.88 yen after touching a three­week
Societe Generale strategist Kit
low of 107.53 overnight. It was on track
Juckes said the dollar has rallied too
to lose about 1.8 per cent on the week,
far, too fast since July, on the back of
which would be its largest weekly loss
good data and a small change in the
since March.
FOMC language.
On October 1, the dollar surged to
In a note published Thursday and
a six­year high of 110.09 yen on factors
titled Don't buy the dollar, just sell the
including expectations for an early rate
euro, Juckes said the European outlook
hike by the Fed.
has taken a turn for the worse, with re­
However, a recent decline in US
cent data confirming that the Ukraine
Treasury yields have helped under­ crisis and sanctions on Russia are hurt­
mine its strength.
ing growth in Germany.
"The Fed mentioned the strong
"Maybe it's time for the FX market
dollar after Japanese authorities had to stop looking for a stronger dollar and
already expressed their concerns to­ focus on the risk of further euro weak­
wards a weak yen.
ness instead," he said.
This puts the two countries in step ­REUTERS.
and has tempered the bullish dollar/yen
scenario," said Koji Fukaya, president
at FPG Securities in Tokyo.
"While the rates markets were less
sanguine about prospects of an earlier
Fed rate hike, the currency market looks
to have gone a little too far," he said.
"The stall in the (dollar) rally is likely
to prompt speculators to unload their
dollar positions."
The Fed's September meeting min­
utes, released on Wednesday, suggested
the US central bank was in no hurry to
hike rates, with a surprise mention of
the greenback's strength further sober­
ing dollar bulls.
Federal Reserve chief Janet Yellen.The US central banksaid it was in no hurry to hike
rates, sapping the greenback's strength, afp
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