No benefit for greenback from risk aversion; British pound retreats
By William L. Watts and Sarah Turner, MarketWatch
LONDON (MarketWatch) — The dollar continued to languish Thursday as risk-minded traders steered clear of the U.S. currency, with soaring oil prices instead providing support for other traditionally safer investments such as the Swiss franc and the Japanese yen.
The dollar index (DXY 77.18, -0.23, -0.29%) , which measures the greenback against a basket of six currencies, declined to 77.210, down from 77.373 late Wednesday.
Against the yen, the dollar (USDYEN 81.7600, -0.7300, -0.8851%) bought ¥81.84, down from ¥82.46 in late North American trading on Wednesday.
And the U.S. unit fell 0.6% against the Swiss franc (USDSWF 0.9255, -0.0076, -0.8147%) to trade at 92.62 centimes. There are 100 centimes in a franc.
Although escalating violence in Libya and turmoil in the surrounding region has benefited some assets usually perceived as “safe havens,” such as gold, the dollar has missed out. Read more on gold.
Safe-haven support for the dollar could start to emerge in coming days or weeks if tensions escalate, “but equally it might not come at all,” said Steven Barrow, currency and fixed-income strategist at Standard Bank, in a note to clients.
If support doesn’t emerge, “it’s a pretty damning indictment of the dollar if you take the view that all the dollar has had going for it in recent years is its safe-haven appeal whenever geopolitical tensions emerge,” he wrote.
Other strategists say the dollar has suffered, at least versus the euro and the British pound, because both the Bank of England and the European Central Bank appear likely to begin raising interest rates before the Federal Reserve, leading to wider interest-rate differentials.
The dollar’s near-term direction could be influenced by the release of weekly jobless-claims data at 8:30 a.m. Eastern, analysts said.
The euro (EURUSD 1.3760, +0.0016, +0.1164%) trimmed an earlier gain to trade at $1.3764, little changed from $1.3761 on Wednesday, when it reached a three-week high against the greenback. See real-time currency quotes and tools.
Meanwhile, sterling (GBPUSD 1.6175, -0.0033, -0.2036%) retreated to $1.6159 from around $1.6211 in late action on Wednesday.
The pound saw some pressure after the Confederation of British Industry’s monthly retail-sales indicator fell to its lowest level since last June. It had pound rallied Wednesday as minutes of the latest Bank of England policy meeting indicated greater support for a rate hike.
