Sterling steadied in early Asian trade on Tuesday after weekend comments from British Prime Minister Theresa May sent it skidding to 2 1/2-month lows, while the dollar wallowed as investors locked in gains.
The pound added 0.2 per cent to $1.2171, after sinking as low as $1.2125 on Monday, its lowest since October 28, following British Prime Minister Theresa May’s statement that she was not interested in keeping “bits of membership” of the European Union.
The dollar inched 0.1 per cent lower against a basket of six major peers, to 101.82, though it remained within sight of last week’s high of 103.82, which was its highest level since 2002.
It fell 0.2 per cent to 115.90 yen, well below its overnight high of 117.53, though off an earlier session low of 115.65 yen as Tokyo traders returned to their desks after markets here were closed for a public holiday on Monday.
Trump’s news conference
US President-elect Donald Trump, who takes office on January 20, is scheduled to hold a news conference on Wednesday that will be his first since winning the November election.
“Some Japanese customers are buying on dips with the dollar at the 115 level, but with Trump’s speech ahead, some people are taking profits and adjusting their positions,” said Kaneo Ogino, director at foreign exchange research firm Global-info Co inTokyo.
“Overall, everyone will just jump on the bandwagon today,after the long weekend,” he said.
The euro gained 0.2 per cent to $1.0590, moving away from last week’s 14-year low of $1.0340.
Fed rate hike
Expectations of higher US interest rates underpinned the greenback. Boston Federal Reserve President Eric Rosengren had on Monday called for the US central bank to step up its pace of interest-rate increases from the once-a-year pattern it has pursued since 2015, warning of inflation risks if it does not.
At a separate event, Atlanta Fed President Dennis Lockhart said it was too early to judge how the incoming Trump administration, which has spoken of implementing fiscal stimulus, may change the path of the economy.
At its last meeting the Fed raised rates and indicated the tempo of increases may accelerate following the Trump’s election on promises of a major spending plan and tax reform. Several policymakers have since said rates may have to rise faster during the Trump Administration in order to check inflation.
But Lockhart said he felt it was still too early to make any judgment about how the new administration may change the path of the economy.