The dollar has been on a tear as soaring inflation, recession fears and worries over central bank policies across the globe hit risk appetite
The dollar slipped on Friday as risk appetite returned to global stock markets and investors appeared to shift their focus away from U.S. interest rate considerations, even as red-hot inflation data suggested more policy tightening was likely.
Traders also remained on edge about prospect of intervention in the yen, which was hovering above three-decade lows.
The dollar index fell 0.275%, extending the overnight session’s 0.5% decline as investors seemingly brushed off data that showed U.S. consumer prices increased more than expected in September.
The dollar has been on a tear as soaring inflation, recession fears and worries over central bank policies across the globe hit risk appetite.
But on Friday, Asian shares tailed Wall Street in moving higher.
Short-sellers in the stock market seemed to be driving the bounce in equities, which in turn pushed the dollar lower, said Bank of Singapore currency strategist Moh Siong Sim.
I think the FX market is taking its cue from the equity market, he said.
Despite this, the investment mood remained broadly cautious, which is likely to continue to support the dollar.
I doubt the weaker dollar will sustain, the dollar is the safe-haven currency currently, Commonwealth Bank of Australia strategist Carol Kong said.
Analysts also pointed to Thursday reports of a possible U-turn by the UK government on its fiscal plans, which also supported risk sentiment.
Focus now shifts to next month’s Federal Reserve policy meeting where it is expected to deliver another 75-basis-point rate increase. Futures prices also reflect about a one-in-10 chance of a full percentage-point rate hike next month.
Elsewhere, the dollar was trading at 147.33 to the yen, below the 32-year peak of 147.665 it hit in the previous session.