By Tom Westbrook
SINGAPORE (Reuters) – The dollar looked set to notch a fourth straight weekly loss on Thursday as tariffs drive investors from U.S. assets, though it lifted off a seven-month low against the yen as U.S.-Japan trade talks have so far steered clear of any currency discussion.
The dollar has taken a beating as the U.S. has threatened, imposed and then postponed massive tariffs, undermining investor confidence in U.S. economic growth and stability.
The 8% gain for the safe-haven Swiss franc since April 2 is the largest among G10 currencies and at 0.8151 per dollar it is testing strong resistance at a decade-high of 0.81.
The euro and yen are not far behind with gains of around 5% on the dollar in little more than two weeks.
The euro eased slightly to $1.1373 in the Asia morning, though it remains set for a fourth straight weekly rise, even with the European Central Bank expected to deliver a 25-basis-point rate cut later in the session.
The dollar touched a seven-month low of 141.62 yen early in the Asia session before bouncing back above 142 when Japan’s economy minister Ryosei Akazawa said foreign exchange had not been discussed at the trade talks in Washington.
The yen had gained into the meetings in anticipation that the countries could agree to strengthen the yen against the dollar. But with long yen positioning the highest on records stretching back to 1986, gains could be unwound if no deal is struck.
The dollar index was parked at 99.5 and also set to notch a loss for the fourth week in a row.
Trade is likely to be lightened into the Easter break.
Overnight U.S. retail sales increased by the most in more than two years and Federal Reserve Chair Jerome Powell seemed in no hurry to move interest rates lower.
Yet the momentum for selling dollars has rolled on.
“We do not think this is a proper de-dollarisation and see no real risk to the USD reserve currency status,” analysts at Citi, led by G10 rates chief Daniel Tobon, said in a note.
“However, the world is overweight U.S. assets,” they said. “Ultimately this ‘sell America’ flow could severely weigh on the USD this year.”
In the note, Citi forecasts the euro hitting highs around $1.20 in the next six to 12 months, before the dollar could start to make a comeback.
The dollar’s slide has already broken the New Zealand dollar out of its recent range and is close to doing the same for the Australian dollar. [AUD/]
The kiwi was above 50-day and 200-day moving averages at $0.5932 on Thursday, though failed to advance much further despite a surprisingly hot inflation reading since price rises looked temporary and unlikely to derail rate cuts.
The Aussie was hovering at $0.6367 ahead of employment data. Sterling took a breather at $1.3216, capped by a softer-than-expected inflation reading on Wednesday.
(Reporting by Tom Westbrook; Editing by Jacqueline Wong)
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