LONDON: The dollar added to tenuous gains on Monday after staging a modest comeback from a two-week decline on Friday, as data suggested that the US economy might be stabilising after a recent soft patch.
The dollar had slid around 5 percent against a basket of major currencies in the second half of April. Weaker-than-expected data had cast doubt on whether the US Federal Reserve would raise interest rates in the coming months.
But the US currency rallied around 0.7 percent on Friday after numbers showed a jump in consumer sentiment and stronger-than-expected vehicle sales.
On Monday, the dollar index was 0.2 percent higher at 95.434. Data on Friday showed speculators had pared back bets on the dollar, pushing the currency's net long positions to their lowest in 4 1/2 months.
"It's too early to call for a new trend of dollar strength at the moment," said Ulrich Leuchtmann, head of FX research at Commerzbank in Frankfurt. "The big correction of extreme dollar long positions, especially against the euro, has not been visible yet. The pain of those still betting that this is a correction has to increase."
The Australian dollar slipped a third of a percent to $0.7823, amid speculation the Reserve Bank of Australia will cut interest rates to a record low 2.0 percent at its policy meeting on Tuesday.
"No (RBA) cut tomorrow can see a retracement to $0.7900 at least, possibly $0.8000," said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore.
The Aussie dollar, which is considered a liquid proxy for China because of Australia's large trade exposure, also suffered from a private business survey that showed China's factory activity dropped at its fastest drop in a year in April. Sterling slipped 0.1 percent to $1.5135.
A closely fought British parliamentary elections on Thursday looks likely to result in a "hung parliament". Trade was thinned by a UK bank holiday.
The euro slipped 0.3 percent to $1.1167. It rose to a two-month high of $1.1290 last week as German bund yields rallied and data suggested the euro zone was pulling away from deflation.
Comments
Comments are closed for this article.