Further doubts over the dollar’s reserve status stoked selling in the US currency yesterday, enabling the pound to recover some of Friday’s heavy losses.
- The greenback lost ground broadly after an article stated that the People’s Bank of China may be considering raising the share of the euro and the yen in its foreign exchange reserves, though the dollar should still remain dominant.
- However it was later revealed that the article was merely the author’s “point of view,” which capped sterling’s gains, as investors checked their dollar selling.
- In addition, the pound found support as declines at the end of last week were seen by some investors as over-stretched, suggesting that the market has oversold sterling.
- However, as the US markets came online, global stocks took a dive into the red, enabling the haven currency to trim its losses.
- Analysts noted that given the huge amount of bearish trades on the dollar in recent weeks, a near-term dollar recovery could be on the horizon.
- In trading today, investors will be looking for direction from sales data in the UK, released at 11:00, and a consumer confidence survey in the US, released at 14:00.