By Kevin BucklandTOKYO, June 29 (Reuters) - The dollar edged higher on Wednesday, keeping its index against major peers nestled below a two-decade hig
By Kevin Buckland
TOKYO, June 29 (Reuters) – The dollar edged higher on Wednesday, keeping its index against major peers nestled below a two-decade high struck two weeks ago, with investors seeking safety in U.S. assets as stocks declined globally due to the mounting risk of a recession.
The dollar index, which measures the greenback against six counterparts, ticked up 0.067% to 104.54, spurred mainly by weakness in the euro overnight. The two-decade high of 105.79 was struck on June 15.
The greenback was firm despite U.S. 10-year Treasury yields retreating by nearly one percentage point in Tokyo trading, as bonds remained in favour with investors due to the souring risk sentiment.
Asian equities slid, following heavy Wall Street losses overnight after a steep drop in U.S. consumer confidence stoked worries about an economic slowdown at a time when the U.S. Federal Reserve is rushing to raise interest rates to bring inflation under control.
The euro slipped 0.14% to $1.0506 after dipping as low as$1.05025 on Tuesday, when European Central Bank (ECB) chief Christine Lagarde offered no fresh insight on the path for European interest rates at the ECB’s annual forum.
The ECB is widely expected to follow its global peers by raising interest rates in July for the first time in a decade to try to cool accelerating inflation, though economists are divided on the magnitude of any hike.
Lagarde and Fed Chair Jerome Powell will speak on a panel at the forum later on Wednesday.
Westpac strategists said in a client note that they saw the dollar index sticking to a range of 101 to 105 for now.
They said the index “is unlikely to peak until we are closer to the end of the Fed’s front-loaded tightening cycle.”
Against the yen, which has even stronger safe haven credentials, the dollar slipped 0.12% to 136.04 yen.
Sterling managed to rise 0.08% to $1.2194.
The risk-sensitive Australian dollar though ticked down 0.09% to $0.68995.
(Reporting by Kevin Buckland; Editing by Simon Cameron-Moore)
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