Forex – dollar rises, but gains remain limited, the aussie declined

© Reuters. – The u.s. dollar rose Thursday in the face of a basket of its rivals, but concerns about global growth, the closure of the us government and the trade war between China and the United States have limited the progress.

“Trade tensions are currently the dominant factor of the confidence of investors and will generate flow of the market,” said Nick Twidale, chief operating officer at Rakuten Securities.

Twidale added that the risk appetite of investors will improve only when the concerns about the partial shutdown of the u.s. government and the trade tensions will dissipate. Trade tensions are again emerged on Thursday, while the access to the Bing search engine of Microsoft (NASDAQ: MSFT) was blocked in China.

Concerns of global growth also spooked investors. On Monday, the international monetary Fund has reduced its forecast for global growth to 2019 and 2020, citing a slowdown greater than expected in China and in the euro area, and stated that the lack of resolution of trade tensions could further destabilize the slowing of the global economy.

The dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.12 per cent to 95,88 at 03h05 ET (08h05 GMT).

The markets are bearish on the prospects for the dollar this year. Concerns over the global economic outlook forced the federal Reserve to adopt a cautious approach to any further increase in interest rates. Traders in futures contracts on interest rate bets that the federal Reserve will maintain its rates in 2019.

The australian dollar was down, while the AUD / USD has lost 0.6% and is trading at 0,7097.

The australian dollar suffered some downward pressure after the National Australia Bank, has dealt a new blow to the real estate market cooled rapidly so that it joined its peers in the increases in mortgage rates, fuelling the discussions on a reduction of the interest rate. Earlier, the Aussie was in the positive field at the back of data on jobs solid.

The yen was slightly down against the dollar, with USD / JPY rising 0.09% to 109.68.

The euro was slightly lower, with the EUR / USD to 1,1373.

Traders had hoped that the european central Bank would remain dovish at its policy meeting later in the day and that it would remain accommodative for an extended period of time.

The low rate of inflation and economic activity weaker than expected in Germany and France could, however, bring the president of the ECB, Mario Draghi, to consider a slowdown in potentially more sustainable.

“If the central bank lowers its forecasts for growth or inflation and that Draghi is focused on growth is weaker, the EUR/USD could easily fall to 1.12 $,” said Kathy lien, director general of the exchange-rate strategy at BK Asset Management.

The british pound was lower, with GBP / USD down 0.21% to 1,3038, while the uncertainty on the Brexit continued.

Since the legislators have rejected the divorce agreement of the First minister Theresa May with the european Union last week during the biggest defeat of british history modern, they attempt to draw a more satisfactory, but no option has yet got the support of the Parliament.

Some analysts expect a limited increase of the pound sterling. Philip Wee, a strategist in foreign currencies at DBS, says that most of the gains of the pound is due to the unwinding of short positions. He sees the pound sterling capped in a range of 1,3170-1,3240 $.

– Reuters contributed to this report.

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