US dollar slips

But gold touches its highest since 8 June
Chief Investment Office11 Aug 2017
Photo credit: AFP Photo

The dollar relinquished early, modest gains to trade lower Thursday (10 August), weighed down by a drop in July inflation at the wholesale level in the US and a decline in Treasury yields. The US Dollar Index (DXY) slipped 0.16% to 93.40.

The greenback fell slightly after data showed July producer prices were weaker than expected on both a monthly and annual basis. Flows were subdued, with traders more focused on Friday’s (11 August) consumer price index data. Action was choppy in the US session, continuing a recent theme, and markets remained preoccupied by simmering tensions between the US and North Korea that drove haven flows into the yen and Treasuries. The decline in the greenback was the first this week and broke a string of four straight advances.

The New Zealand dollar fell vs. all of its G-10 peers and remained on a defensive footing after the Reserve Bank of New Zealand kept rates on hold, as expected. The currency posted a 0.85% decline to close at USD0.7275. Governor Graeme Wheeler and Assistant Governor John McDermott both emphasized the need for a lower FX rate, while reminding markets that FX intervention remained an option to achieve that goal.

Meanwhile, gold is beating US stocks this year as a war of words between US President Donald Trump and North Korea, along with a weaker dollar, boosted demand for haven assets. Bullion has climbed 12% in 2017, overtaking the S&P 500 index of leading US stocks as Japan and South Korea warned the North Korean dictatorship it faces a strong response if it follows through on threats to launch a missile toward the US territory of Guam.

Gold rose 0.72% to USD1,286.53 a troy ounce after touching USD1,287.92, the highest since 8 June. – Bloomberg News.

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