Dollar strengthens as U.S. stocks rebound off lows
Reuters
Published Dec 26, 2018 04:17PM ET
Dollar strengthens as U.S. stocks rebound off lows
By Karen Brettell
NEW YORK (Reuters) - The dollar gained against a basket of other currencies on Wednesday as U.S. stocks came off 20-month lows, though uncertainty relating to the U.S. government shutdown and Federal Reserve monetary policy remained a headwind for the greenback.
U.S. stocks gained more than 2 percent as a rebound in technology shares and a jump in retailers led by Amazon.com (O:AMZN) put the market on pace to snap a four-session losing streak.
"There is a modest sense of temporary stability returning to equity markets," Nick Bennenbroek, a currency strategist at Wells Fargo (NYSE:WFC) in New York, said in a report.
"That said, trading conditions remain light and investors remain somewhat cautious, watching closely for more U.S. political headlines," Bennenbroek said.
On Tuesday, U.S. President Donald Trump said the partial shutdown of the federal government was going to last until his demand for funds to build a wall on the U.S.-Mexico border is met.
Trump also repeated his criticism that the Fed has raised interest rates too quickly. The dollar has been hit in recent weeks by investor fears that rate increases will hurt the U.S. economy as international growth sputters.
“There's an endless laundry list of concerns: Trump berating the Fed, Trade Wars, China slowing growth, Brexit casualties, EU slowdown. But when you factor in a downturn in the U.S. economy, this is when things get ugly,” Stephen Innes, head of trading APAC at Oanda in Singapore, said in a note.
The dollar index against a basket of six other major currencies (DXY) gained 0.43 percent to 96.967. It was down from a 1-1/2-year high of 97.711 on Dec. 14.
In an apparent attempt to calm Wall Street nerves frayed by Trump's criticism of the Fed, a White House official said on Wednesday that Fed Chairman Jerome Powell faces no risk of losing his job and President Donald Trump is happy with his Treasury secretary, Steven Mnuchin.
Liquidity was thin after major markets were closed on Tuesday for the Christmas holiday. Markets in Britain, Germany and France remained closed on Wednesday.
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Written By: Reuters
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