SINGAPORE (Reuters) – The dollar pulled back on Wednesday as weak U.S. manufacturing stoked wagers on aggressive policy easing, while the British pound recouped losses in the wake of a parliamentary vote that opened the door for another Brexit delay.
Manufacturing activity in the world’s biggest economy contracted for the first time in three years last month, according to the Institute for Supply Management.
Wind - Greenback - Bond - Market - Investors
That knocked the wind from the greenback and rallied the bond market as investors increased bets on a couple of Federal Reserve rate cuts before Christmas.
A 25-basis-point cut is now fully priced in, while yields on benchmark 10-year Treasuries , which fall when prices rise, dropped to their lowest in two years.
Result - Greenback - Ground - Yen - Dollar
As a result, the greenback gave ground to the yen , the Australian dollar , and the pound . Sterling climbed as high as $1.210 in early Asian trade, helped by the possibility that a no-deal Brexit may yet be averted.
“The expectation that the Fed will come to the rescue has increased,” said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney.
Capitulation - Dollar - Rise - Dollar
“But it’s not a capitulation on the dollar. It’s just merely stopped the recent rise of the dollar.”
Against a basket of currencies the dollar traded slightly lower at 98.944, which was 0.4% below the two-year peak it touched on Tuesday.
Sterling - Lawmakers - Control - Agenda - Vote
The sterling was pushed higher after British lawmakers voted to take control of the parliamentary agenda and scheduled another vote on Wednesday. If the vote is successful, it would force...
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