US dollar steadies vs euro as equities rebound

JAN 13, 20166:53 AM

[NEW YORK] The US dollar steadied against the euro on Tuesday as global equity markets rebounded from days of China-driven turmoil despite worries about plummeting oil prices.

The euro traded at US$1.0858 around 2200, unchanged from the same time on Monday.

The yen edged a bit higher, rising to 117.66 per dollar compared with 117.77. The euro dipped to 127.76 from 127.87.

"A better market mood leaves the euro vulnerable as it tends to entice traders to sell the cheap euro for higher-yielding, riskier bets," said Joe Manimbo at Western Union Business Solutions.

But, he said, "with global risks dominating trade and casting fundamentals to the side, scope for euro weakness could prove limited." Kathy Lien at BK Asset Management said that a suicide-bomber attack in Istanbul that killed 10 people may have dented sentiment on the euro.

"The attacks in Turkey this morning have raised concerns that Europe may be hit again over the next few months and I think that is kind of scaring investors from holding euros," Ms Lien said.

Traders will be looking ahead to the Federal Reserve's Beige Book report, to be published Wednesday, for clues about how fast the central bank intends to raise interest rates.

The collection of anecdotal information about the health of the US economy helps to inform monetary policy decisions.

Since raising its benchmark federal funds rate from near zero to 0.25-0.50 per cent in mid-December, the Fed has signaled it sees four quarter-point hikes this year.

But investors are anticipating only two increases in 2016, and the recent bout of market volatility spurred by concerns about China's slowing economy has led some to predict there would be only one.

AFP