CURRENCIES: Dollar Turns Positive; British Pound Climbs As Likelihood Of Brexit Delay Rises
12 January 2019 - 7:46AM
Dow Jones News
By Anneken Tappe, MarketWatch
The U.S. dollar on Friday flipped into positive territory
against many of its rivals in the aftermath of December
consumer-price inflation figures. One exception was the British
pound, which defended its strength after U.K. newspaper The Evening
Standard reported that a delay to the March 29 Brexit was becoming
increasingly likely.
The buck started the session on the back foot, but managed to
climb after December consumer-price inflation data was released
even though it showed CPI to drop for the first time in nine months
(http://www.marketwatch.com/story/consumer-inflation-falls-for-first-time-in-nine-months-due-to-lower-gas-prices-cpi-shows-2019-01-11)
on the back of lower gas prices. Still, the ICE U.S. Dollar Index
moved up 0.1% to 95.624.
See:Big Mac Index shows the dollar is at its strongest in 30
years
(http://www.marketwatch.com/story/big-mac-index-shows-the-dollar-is-at-its-strongest-in-30-years-2019-01-10)
"I don't think the dollar move was necessarily linked to the CPI
data," said Minh Trang, senior FX trader at Silicon Valley
Bank.
Simultaneously to the greenback creeping higher, the euro gave
up its gains, slipping to $1.1471, compared with $1.1500 late
Thursday in New York. Earlier in the week, the shared eurozone
currency reached a three-month high.
"The euro certainly feels like it found a floor," Trang
said.
But clear drivers in form of buoyant economic data, a resolution
to Brexit or monetary policy tightening are only expected later in
the year.
In other U.S. news, Chinese Vice Premier Liu He will be in
Washington
(http://www.marketwatch.com/story/chinas-top-trade-official-expected-to-visit-us-for-trade-talks-mnuchin-says-2019-01-10)
at the end of January to meet with trade representatives.
Also check out:BOE's Carney sees the U.S. dollar eventually
losing its reserve-currency status
(http://www.marketwatch.com/story/boes-carney-sees-the-us-dollar-eventually-losing-its-reserve-currency-status-2019-01-10)
In the U.K., the possibility of a delay to the March 29 Brexit
day is becoming more real. While the idea of a delay was refuted by
Prime Minister Theresa May's government earlier this week, Friday's
report said that May's cabinet ministers saw the likelihood of it
rising
(http://www.marketwatch.com/story/british-pound-jumps-after-news-report-says-brexit-delay-likely-2019-01-11).
The pound climbed to a session high of $1.2867 in response. It last
fetched $1.2851, versus $1.2749 late Thursday in New York.
Sterling also strengthened against the euro , with one euro last
buying GBP0.8926, down 1%.
"Sterling's aggressive appreciation following the report
continues to highlight how the currency remains extremely sensitive
and highly reactive to Brexit headlines," wrote Lukman Otunuga,
research analyst at FXTM.
The U.K. Parliament is slated to vote on May's Brexit deal on
Jan. 15, but market participants are skeptical whether she will be
able to shore up enough votes. The deal had initially been headed
for a December vote, but was postponed under the assumption May
would otherwise be defeated.
On Thursday, Labor Party leader Jeremy Corbyn said the Brexit
deadlock demanded fresh elections.
Also read:Brexit Brief: Business lobby warns of risks to
thousands of U.K. jobs
(http://www.marketwatch.com/story/brexit-brief-business-lobby-warns-of-risks-to-thousands-of-uk-jobs-2019-01-11)
(END) Dow Jones Newswires
January 11, 2019 15:31 ET (20:31 GMT)
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