Forex – dollar advances, the book glides with the risk

© Reuters. – The u.s. dollar rose Thursday in the face of a basket of its major rivals, building on the strong gains posted recently, even though the british pound has slipped in a climate of reduced risk.

The dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.14% to 95,80 to 03h54 ET (08h54 GMT), after gaining about 1% over the previous five sessions.

The sentiment in the market remained moderate in the face of fears that the closure of the government is starting to have adverse effects on the economy, while investors await more information from the federal Reserve, after that a growing number of its officials have been cautious in the face of further rate hikes.

“There are a lot of speculations on the end of the cycle of rising interest rates, and many even talk of rate cuts this year,” said Bart Wakabayashi, director of the branch office in Tokyo to State Street Bank.

“The immediate impact will be the message of the Fed and, of course, his action”, he said. “If we assume that the market is still long on the dollar, any change will have an effect quite sustainable.”

The Fed will hold its next policy meeting on 29 and 30 January.

American businesses have become less optimistic in recent months, said the Fed in a report on the economy, which reinforces the president Jerome Powell in its willingness to show more “patience” in the face of rising interest rates.

The yen, usually sought by investors as a safe haven in times of economic stress or market, has gained ground against the greenback with USD / JPY down 0.28% to 108,76.

The euro declined slightly against the u.s. currency, with the EUR / USD down 0.11% to 1,1338, while persistent concerns about the euro zone economy are weighing.

Data this week show that Germany has barely avoided slipping into recession in the second half of 2018, and the head of the european central Bank, Mario Draghi, warned on Tuesday that the economic developments in the euro area had been weaker than expected.

The pound was also lower against the dollar, with GBP / USD down 0.18% to 1,2857, while the uncertainty on the Brexit persisted. The british pound shows a slight decrease compared to the euro, with EUR / GBP rising 0.14% to 0,8856.

As expected, the first british minister Theresa May has won little the vote of confidence and invited other party leaders to talks to try to break the impasse on an agreement of Brexit after the proposal she submitted was rejected by the legislature Tuesday.

An overview of the Plan ‘B’ is expected for Monday and the market assumes that it will be necessary to extend the release date of the article 50 after the 29th of march.

“Nothing happened in the last 24 hours to discourage us from thinking that we are headed in the direction of a delay to the article 50, Brexit more soft, or the cancellation of the Brexit,” said Ray Attrill, head of exchange-rate strategy at NAB.

Wakabayashi, of State Street Bank stated that the euro and the pound sterling, “I don’t really see why you would be in the position heavily in the two cases in a context marked by “Brexit” unclear.”

“I wouldn’t be overexposed with such a point of polling in the area,” he said.

– Reuters contributed to this report.

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