Reuters logo
FOREX -Dollar gains against sterling on Brexit worries, U.S. growth bets
December 28, 2016 / 8:22 PM / a year ago

FOREX -Dollar gains against sterling on Brexit worries, U.S. growth bets

(Updates prices)

* Dollar hits two-month high vs sterling to $1.2201

* Euro hits 8-day low vs dollar of $1.0372

* Higher expected U.S. growth boosts dollar

* Dollar on track to gain 4.7 pct for year

By Sam Forgione

NEW YORK, Dec 28 (Reuters) - The U.S. dollar hit its highest level in two months against the sterling on Wednesday on concerns over next year’s Brexit negotiations, while expectations of higher U.S. economic growth also underpinned the greenback.

Sterling fell as much as 0.5 percent to a session low of $1.2201, its weakest since Oct. 31. Britain faces uncertainty next year over Brexit negotiations. In October, Prime Minister Theresa May said she would trigger the process to leave the European Union by the end of March.

Expectations that U.S. President-elect Donald Trump’s incoming administration would boost U.S. growth through fiscal stimulus also continued to bolster the dollar.

Trump plans to make an announcement related to the economy between 4 p.m. and 5 p.m. ET (2100 to 2200 GMT), incoming White House spokesman Sean Spicer told reporters on a conference call.

The dollar index, which measures the greenback against a basket of six major rivals, has gained 4.7 percent this year. All those gains have come after the Nov. 8 U.S. election.

The Federal Reserve’s projections, released on Dec. 14, of three rate hikes for 2017 from the two foreseen in September have also contributed to the dollar’s recent gains.

“This is just a continuation of the trend” of dollar strength, said Axel Merk, president and chief investment officer of Palo Alto, California-based Merk Investments. Merk, who noted that trading volumes were thin with many traders on vacation, said the upcoming Brexit talks did not bode well for sterling.

The euro fell as much as 0.8 percent against the dollar to an eight-day low of $1.0372. Against the Japanese currency, the dollar was last down 0.15 percent at 117.21 yen , slipping from an earlier six-day high of 117.81.

The dollar index was last up 0.28 percent at 103.310 after hitting a session high of 103.630 and flirting with a 14-year peak of 103.650 struck on Dec. 20.

Some analysts said another source of euro weakness was the rise in the European Central Bank’s estimates of how much additional capital will be needed to prop up Italian bank Monte dei Paschi di Siena.

“Our case is that there’s probably a bit more room for (the dollar) to run,” said Dominic Bunning, a strategist with HSBC in London.

The euro remained weak against the dollar even though contracts to buy previously owned U.S. homes fell in November to the lowest in nearly a year, according to National Association of Realtors data. (Reporting by Sam Forgione; Additional reporting by Patrick Graham in London; Editing by David Gregorio and Richard Chang)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below