Dollar Falls, Pound Rallies After U.K. Election -- Update
December 13 2019 - 06:08PM
Dow Jones News
By Ira Iosebashvili
The dollar fell Friday, pressured by a postelection rally in the
British pound.
The WSJ Dollar Index, which measures the U.S. currency against a
basket of 16 others, was recently down 0.1% at 90.24, pressured by
a 1.3% rally in the pound.
Investors have piled into the British currency on expectations
that a resounding victory by Conservatives in the U.K's Dec. 12
election will ensure a smooth, orderly Brexit.
Sterling's rise from multiyear lows in September has made it one
of the market's best-performing currencies, having risen by more
than 6% against the dollar over the last 12 months. It was at
$1.3327 in late afternoon New York trading.
Some market participants believe the pound's rally might not
have much further to run.
A Tory victory was "already the widespread assumption in the
market before the election. Consequently, we see little room for
the feel-good factor to last longer than a few days," analysts at
ING said in a note to investors. "The focus in the first half of
next year will quickly turn to the challenge of negotiating a trade
deal in a very short amount of time."
In fixed income, yields on the benchmark U.S. 10-year Treasury
note settled at 1.820%, from 1.901% on Thursday, following
worse-than-anticipated retail sales data and growing uncertainty
over the details of a preliminary agreement reached by the U.S. and
China in their long running-trade war. Bond yields fall as prices
rise.
The 10-year yield declined early in the session after data
showing U.S. retail sales advanced at a lackluster pace in November
stoked demand for government bonds, a popular haven for nervous
investors.
Yields declined again after Chinese trade negotiators said the
U.S. would remove tariffs in stages, declining to disclose details
on the scale of the tariff reduction or of its purchases of U.S.
farm products.
President Trump had tweeted that the two sides had agreed "to a
very large Phase One Deal with China," adding that the 25% tariffs
on Chinese imports would remain but that the 15% levies on other
goods would be cut in half.
"Investors were hoping for more detail on this deal," said
George Gero, managing director at RBC Wealth Management.
Write to Ira Iosebashvili at ira.iosebashvili@wsj.com
(END) Dow Jones Newswires
December 13, 2019 17:53 ET (22:53 GMT)
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