MW: Dollar struggles to move higher; Aussie dollar surges on inflation
The dollar was struggling to go upside against the yen during Asia trade Wednesday, amid a lack of fresh trading cues to drive the U.S. currency higher.
Meanwhile, the Australian dollar soared after faster-than-expected inflation growth helped recede expectations for the central bank to launch an extra easing in the near future.
The greenback USDJPY, +0.01% was changing hands at ¥104.27, compared with ¥104.23 late Tuesday in New York. The U.S. currency touched as high as ¥104.87 overnight, its highest level since July 29. But buying in Tokyo session lacked vigor due to “a sense of accomplishment” after touching the three-month high.
“We’ve been seeing the dollar well supported at its ¥103-level, but struggling on its upside above ¥104.50,” said Daisaku Ueno, chief foreign exchange strategist at Mitsubishi UFJ Morgan Stanley. Investors have found there are no incentives to drive the dollar ahead of the U.S. presidential election, but they also feel a lack of yen-moving factors.
Investors therefore are shifting their focus to other currencies such as the Australian dollar and the pound, said Ueno. “I feel investors are taking a breather to trade the dollar-yen pair for now.”
Earlier in the morning session, the Australian dollar AUDUSD, +0.3924% jumped to $0.7709 from $0.7646. The Aussie dollar AUDJPY, +0.43% also hit a three-month high of ¥80.23. The gain followed release of data which showed that consumer prices rose 0.7% in the September quarter, faster than a 0.5% rise in the market consensus.
The reading prompted buying of the Aussie dollar, as investors now see that the Reserve Bank of Australia is less likely to reduce rates at its upcoming monetary policy setting meeting in November.
The euro was almost unchanged against the dollar after gaining ground on European Central Bank chief Mario Draghi’s comments that the central bank doesn’t want rates to stay negative for a protracted period. The euro EURUSD, +0.3857% was flat at $1.0888 from the same level late Tuesday, while the common currency EURJPY, +0.38% rose moderately to ¥113.55 from ¥113.49.
Amid lingering fears about a hard Brexit, the pound GBPUSD, +0.2379% weakened to $1.2163 from $1.2189.
The WSJ Dollar Index BUXX, -0.14% , a measure of the dollar against a basket of major currencies, was down 0.01% at 88.57.
