CURRENCIES: Dollar Under Pressure As Political Uncertainty Weighs
March 23 2017 - 3:31PM
Dow Jones News
By Anora Mahmudova and Sara Sjolin, MarketWatch
Pound jumps above $1.25 after U.K. retail-sales surge in
February
The U.S. dollar on Thursday weakened against the Japanese yen
and the pound amid heightened uncertainty about the future of the
health-care legislation.
U.S. legislators in the House are scheduled to vote on repealing
and replacing the Affordable Care Act, known as Obamacare, later on
Thursday, but may decide to postpone the vote if not enough
Republicans support the bill.
The ICE Dollar Index was marginally higher at 99.75, near its
lowest level in seven weeks.
Against the yen, the greenback fell to the lowest level in more
than four months, trading at Yen110.99 late Thursday in New York,
down 0.2% from Yen111.17 late Wednesday in New York.
"We view the weakness of the dollar as the reflection of
political uncertainty, with the implication that the administration
cannot pass the health-care bill, which will delay other policy
changes surrounding tax regulations and spending," said Omer
Esiner, chief market analyst at Commonwealth Foreign Exchange.
Esiner said that the longer-term outlook for the dollar is still
to go higher, as the monetary policy is likely continue to
tighten.
The Federal Reserve raised interest rates last week while policy
makers are intent to raise rates at least two more times this
year.
The dollar's reaction to jobless claims and new-home sales was
largely muted.
Initial jobless claims filed last week jumped
(http://www.marketwatch.com/story/jobless-claims-climb-15000-to-258000-2017-03-23)
by 15,000 to 258,000 and matched a two-month high, while layoffs in
the past few years were revised higher.
Sales of newly constructed homes
(http://www.marketwatch.com/story/new-home-sales-roar-to-a-7-month-high-592000-annual-rate-in-february-2017-03-23)powered
to the highest pace in seven months in February as firm demand for
housing outweighed lean supply and slightly higher mortgage
rates.
The euro was weaker against the dollar, buying $1.0784 late
Thursday in New York from $1.0798 late Wednesday.
The pound rose back above $1.25 to trade around a one-month high
on Thursday after a surprisingly strong reading on U.K. retail
sales fueled hopes of a more hawkish tone at the Bank of
England.
Sterling jumped to an intraday high of $1.2528, up from $1.2484
late Wednesday in New York. It was last trading at $1.2513 late
Thursday in New York. The move came after the Office for National
Statistics said retail sales rose 1.4% in February on the month
(http://www.marketwatch.com/story/uk-retail-sales-surge-14-in-february-2017-03-23),
easily beating forecasts of a 0.4% rise.
"Retail sales data was very strong this morning and sterling has
rallied once again. It comes hot off the back of the headline
inflation earlier in the week, with the hawkish MPC statement and
rate vote results still resonating," said Alex Edwards, currency
analyst at OFX, in a note.
"It's likely to make for an even more aggressive BOE statement
next month, with sterling up through $1.25 as a result. This recent
combination of market data will likely support GBP through to the
end of the week and perhaps into next. $1.26 could well be in
sight," he added.
The pound started to rise last week after BOE member Kristin
Forbes took markets by surprise and voted for a rate increase at
the bank's policy-setting meeting. The hawkish view was further
supported by consumer price figures out this week, showing U.K.
inflation shot above the central bank's 2% target in February.
(END) Dow Jones Newswires
March 23, 2017 15:16 ET (19:16 GMT)
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