TOKYO (Reuters) – The dollar rose against its peer group on Friday and found support as the recent episode of tensions between the US and China dampened investor appetite for risk. The weakness of emerging market currencies also contributed to the greenback.
FILE PHOTO: The US dollar banknotes can be seen in this photo taken on February 1
The dollar index against a basket of six major currencies .DXY was a shade higher at 94.748. The index rose 0.15 percent overnight and ended a four-day losing streak.
The greenback, which tends to attract safe havens in times of market turmoil and political tensions, drew its last wave of support as investors embarked on the next round of US-China trade dispute.
Bloomberg News reported Thursday that US President Donald Trump was ready to start a trade war with China quickly, saying he was ready to impose tariffs on China's $ 200 billion for Chinese imports as soon as a public statement emerges the plan ends next week.
"There is a continuing trend to buy the dollar in the context of friction, which has a negative impact on emerging market currencies and boosts the dollar," said Junichi Ishikawa, senior FX strategist at IG Securities in China Tokyo.
"The euro has also made headlines due to the perceived involvement of the Eurozone in the emerging economies."
The euro lost 0.1 percent to EUR 1.1662 = after losing 0.3 percent overnight on a rise in Italian government bonds Yields put further pressure on the currency.
Italian bond yields rose on Thursday, as the government's proposed tax cuts and social spending could worsen their debt situation. The yield premium of the Italian-German bond has thus developed the most since 2013.
The Turkish lira weakened by its fifth day, most recently by 1.5 percent to 6.7495 per dollar TRYTOM = D4 and climbed back to its record low of 7.24 per dollar on 13 August.
"It is a bit stretchy to attribute Allen to turbulence in emerging market currencies such as the Turkish Lira and the Argentine peso," said Daisuke Karakama, chief market economist at Mizuho Bank.
"However, the outlook for EM currencies remains bleak overall and will continue to trigger risk aversion, and the euro is not a currency facing the market in times of" risk-off, "Karakama added.
The Argentine peso lost on Thursday nearly a fifth of its value and fell to a record low against the dollar.
The peso-ARS = RASL has dropped as investor confidence in President Mauricio's ability to cope with the economic crisis that has confronted his country, A massive rate hike by the Argentine central bank has barely halted the peso's fall.
The South African rand fell 0.35 percent to 14.76 per dollar ZAR = D4 after falling more than 2 percent in overnight trading
China's yen was 0.15 percent firmer in onshore trading at 6.8344 per CNY = CFXS, having lost 0.35 percent the previous day.
The Japanese yen was little changed with 111,000 JPY. The yen, another safe haven alongside the dollar and the Swiss franc, gained 0.6% on Thursday.
The Swiss currency rose for the sixth consecutive year, reaching 0.9680 francs per dollar. This is the highest level since mid-April.
The pound was little changed at $ 1,3009 GBP = D4. Sterling gained 1.2 percent this week, reaching a four-week high of $ 1.3043 on Thursday, helped by the reduced risk of a no-deal Brexit for the UK.
Reporting by Shinichi Saoshiro; Edited by Eric Meijer