- Korean won slides for fourth day; worst streak since February
- Probability of September Fed move drops to 22% from 30%
The Australian dollar gave up overnight gains to lead declines among developed-market currencies as the greenback rebounded against its major peers.
The Aussie fell as iron ore futures dropped to the lowest level since July. South Korea’s won slipped for a fourth day, its longest run of losses since February. The U.S. currency regained some of the ground it lost Monday after Federal Reserve Governor Lael Brainard said the case for the central bank to raise interest rates is “less compelling.” The market-implied probability of a hike at the Sept. 20-21 meeting dropped to 22 percent from 30 percent at the end of last week.
“The Aussie dipped during the Asian session as iron ore futures fell,” said Elias Haddad a senior currency strategist at Commonwealth bank of Australia in Sydney. “Rising steel stockpiles in China is raising surplus concerns in steel markets.”
The Aussie slid as iron ore futures headed for their lowest close in 2 1/2 months on the Dalian Commodity Exchange. It sank 0.5 percent to 75.30 U.S. cents as of 7:38 a.m. in London, a day after it gained 0.3 percent. Iron ore for January delivery slumped 3.7 percent to 390 yuan.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, rose 0.2 percent, after dropping 0.3 percent on Monday. The yen was little changed as well at 101.90 per dollar. The won slumped 0.6 percent, taking its four-day drop to 2.5 percent.
Brainard counseled continued prudence in the move toward tighter U.S. policy, even as she acknowledged that the world’s largest economy was making gradual progress toward achieving the central bank’s goals. Her comments in Chicago were the last before the Fed enters its quiet period during which officials abstain from publicly speaking about monetary policy in the run-up to their next meeting.
“With the market already short the dollar according to our metrics, and rates markets unlikely to reduce September pricing much further, we think dollar downside from here is likely to be limited ahead of the meeting,” BNP Paribas SA Strategists led by Steven Saywell wrote in a note.