U.S. dollar nearly erases Wednesday’s gains
The U.S. dollar weakened on Thursday, nearly erasing its Boxing Day gains, while haven currencies strengthened, amid a fresh retrenchment in risk appetite a day after stock markets staged a historic burst higher.
U.S. stocks failed to follow through on their best one-day percentage rise since 2009, highlighting volatility in assets perceived as risky in final trading days of 2018, despite an apparent moment of optimism.
“Trading volumes are thin, of course, and will not pick up until next week but the recent areas of concern for the markets — the U.S. government shutdown, which will delay some economic reports, and President Donald Trump’s criticism of the Federal Reserve leadership even as the tightening cycle may be reaching a peak — are unlikely to disappear quickly,” wrote Scotiabank strategists Shaun Osborne and Eric Theoret.
“That suggests choppy and uncertain trading will continue. Broader trade worries, Brexit and rising deficits in the US continue to lurk in the background, ready to fill the worry gap,” they said.
The ICE U.S. Dollar Index DXY, -0.22% pulled back again on Thursday, slipping 0.5% to 96.537. The gauge is on track to finish the last trading week of the year down 0.4%, according to FactSet.
The euro EURUSD, +0.2187% and traditional havens like the Japanese yen USDJPY, -0.51% and Swiss franc USDCHF, -0.2329% were the best performers against the greenback, benefiting from the turn in risk sentiment from Wednesday.
The euro last bought $1.1442, up from 1.1353.
Versus the yen, the greenback dropped to ¥110.85, down 0.4%, while also sliding to 0.9875 franc, down 0.8%.
The Swedish krona USDSEK, -0.5372% however, was the strongest performer against the buck. The dollar dropped to a three-day low against the Scandinavian currency, last buying 9.0156 krona, down 0.9%.
Elsewhere, commodity-linked currencies like the Canadian dollar USDCAD, -0.0587% were weaker as crude-oil futures CLG9, +2.87% turned lower.