ZAW: Dollar Battered, Falls To Near 7-Mo Lows Vs Yen
TORONTO (Dow Jones)--The dollar has slipped to a series of fresh multi-month lows against the euro and yen Wednesday morning as a modest gains for equities continue to stoke risk appetite.
The dollar fell below the Y92.00 mark to touch its lowest intraday levels against the yen in nearly seven months. The greenback's low at Y91.61 marks its weakest intraday level against the Japanese currency since Feb. 17, according to EBS via CQG.
Also during the New York morning, the euro briefly spiked above $1.4600 for the first time since Dec. 18, 2008. The DXY Dollar Index, which tracks the greenback's performance against a basket of six currencies, fell to 76.80, its lowest point in nearly 12 months.
Currency movements so far Wednesday have continued to follow shifts in risk appetite as reflected in equity market developments. The dollar hit its intraday lows alongside a corresponding recovery from initial weakness for U.S. stocks. Late morning, the Dow Jones Industrial Average is up about 35 points and major European indexes are also holding in positive territory.
The dollar began the day by stabilizing from a steep selloff on Tuesday, though negative sentiment continues to weigh on the currency amid less extreme movements than seen Tuesday.
The dollar's intraday dips against both the euro and yen are due to the "moderate shift in sentiment" signalled by the mild U.S. equity rebound, as well as to the influence of technical factors, said senior currency strategist Matthew Strauss of RBC Capital Markets in Toronto.
The morning's developments have backed the view that positioning, technical influences and risk appetites still outweigh fundamentals as primary drivers for the dollar.
"We've seen some break of the ranges that the market got used to over the last 24 hours," he said. "Ninety-two yen was the magical trigger for the dollar-yen pair, and once it broke through, it continued falling."
However, fundamentals like growth differentials and massive U.S. deficits might be assuming more prominent roles as negative weights on the dollar.
"The reality is that the fundamental backdrop, while evolving, is not necessarily doing so in dramatic fashion for the dollar," according to HSBC currency strategists.
Late morning, the euro remains near its $1.4601 intraday high, trading at $1.4573 from $1.4489 late Tuesday. The dollar is at Y91.90 from Y92.26 a day earlier, while the euro trades at Y133.95 from Y133.71 Tuesday. Pound sterling is higher at $1.6570 from $1.6500, while the dollar against the Swiss franc trades at CHF1.0400 from CHF1.0467 late Tuesday.
