U.S. Dollar Falls On Report Of China To Slow U.S. Bond Purchases
January 10 2018 - 3:23AM
RTTF2
The U.S. dollar declined against its major opponents in the
European session on Wednesday, following a media report that China
is considering slowing or halting new Treasury purchases for
foreign reserves.
Bloomberg reported that Chinese officials are reviewing their
stand on investment in U.S. government debt, given trade tensions
between Beijing and Washington as well as relatively lower
attractiveness for U.S. treasuries than other assets.
U.S. treasury yields spiked up following the news, with the
yield on 10-year U.S. Treasuries rising to a 10-month high of 2.588
percent in European trading.
China is the largest foreign investor in U.S. government debt,
holding U.S. securities worth $1.1892 trillion as of October,
2017.
The currency was higher against its major rivals in the Asian
session, with the exception of the yen.
Extending early slide, the greenback weakened to a 1-1/2-month
low of 111.27 against the yen, from a high of 112.78 hit at 7:00 pm
ET. The next possible support for the greenback is seen around the
110.00 region.
The greenback, having advanced to near a 2-week high of 1.3482
against the pound at 5:15 am ET, reversed direction and edged down
to 1.3562. If the greenback extends decline, 1.38 is likely seen as
its next support level.
Data from the Office for National Statistics showed that UK
industrial production climbed for the eighth straight month in
November driven by energy and manufacturing output.
Monthly growth in industrial output doubled to 0.4 percent from
0.2 percent in October. The rate came in line with expectations and
marked the eighth consecutive expansion.
The greenback slipped to 2-day lows of 1.2018 against the euro
and 0.9755 versus the franc, off its early high of 1.1923 and near
a 2-week high of 0.9846, respectively. Continuation of the
greenback's downtrend may see it challenging support around 1.23
against the euro and 0.96 against the franc.
Reversing from an early high of 1.2476 against the loonie, the
greenback dropped to 1.2428. The greenback is seen finding support
around the 1.23 area.
The greenback hit a 2-day low of 0.7866 against the aussie and a
3-1/2-month low of 0.7229 against the kiwi, from its early high of
0.7808 and a 6-day high of 0.7141, respectively. On the downside,
0.795 and 0.74 are likely seen as the next support levels for the
greenback against the aussie and the kiwi, respectively.
Looking ahead, U.S. import and export prices for December and
wholesale inventories for November as well as Canada building
permits for the same month are set for release in the New York
session.
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