Wednesday, the greenback slipped from one-month highs against its major currency rivals as falling oil prices pushed down the United States yield. The dollar index against a group of major currencies was at 0.05% lower at 97.699; the dollar had hit a one-month high of 97.871 on Tuesday as the expectations that the United States Fed, which hiked interests rates last week, would tighten policy again in 2017.
The dollar’s advance was somehow delayed as the dollar-supportive bounce in the United States Treasury yields was cut short overnight. IN addition, which regards to the big drop in oil prices; the 10-year Treasury note yield fell sharply on Tuesday, which reversed a large portion of the gains it made after the Federal Reserve left the door open for another rate increase this year.
Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo said that lower crude prices weaken inflammatory pressures and turn arrest the rise in United States yields. He also added that the U.S. inflation indicators have not been strong to begin with, and as oil prices are dropping, it could add further pressure to the dollar by weakening sentiment towards the U.S. energy sector.
On the other hand, sterling wobbled near two-month lows after Bank of England’s Carney said on Tuesday that now was not the time to raise UK interest rates. Last week, three out of eight Bank of England policymakers voted in favor of a rate and raised hopes for a near-term tightening. The pound was little changed at $1.2630. Sterling had slid 0.9% overnight and plumbed a two-month trough of $1.2603.