The dollar was hit by fresh selling in Asian trading Friday, a day after notching a 2½-year low, as reasons for caution on the currency continued to mount.
The Wall Street Journal Dollar Index was off 0.4% in Asia to 84.38, putting it down 9.2% for the year.
Thursday’s 0.7% drop was part of a broader move by investors into haven assets such as gold and government debt—a dollar “capitulation trade,” said Rob Rennie, currency-strategy chief at Australian bank Westpac . It was fueled in part by the European Central Bank, which raised growth forecasts and thus spurred the euro.
The action highlighted how market sentiment has shifted as 2017 has progressed. The year began with high investor hopes that the Trump administration’s program of infrastructure spending, tax overhaul and regulatory cutbacks would cause long-muted U.S. growth to accelerate.
But the enthusiasm has waned as months pass without legislation, despite Republican control of not just the White House but Congress.
The dollar fell Friday to a 32-month low against the euro in Asian trading—the euro nearly topping $1.21—while it hit another 10-month low versus the yen, at ¥107.62. That compares with around $1.1865 and ¥110.25 at the end of last week.
A litany of factors is putting fresh pressure on the dollar. Doubts that the Federal Reserve has the firepower, or the will, to raise interest rates again this year, given soft inflation, only grew when the country’s fourth-largest city was flooded by a massive hurricane—and with the prospect of an even-stronger storm cutting through the length of Florida, the country’s third-biggest state by population. READ MORE
