Dollar Falls With U.S. Yields as Brexit Concern Spurs Safety Bid

Updated on
  • Traders awaiting May’s speech Tuesday about U.K. Brexit plans
  • Greenback slides seventh day versus yen, reaches one-month low

Is Trump Torn Between a Strong and Weak U.S. Dollar?

The dollar fell as Treasury yields declined following a long weekend with investors seeking safety amid concern the U.K. is heading for a so-called hard Brexit.

The greenback dropped for a seventh day against the yen, the longest losing streak since June, and declined against all its Group of 10 peers. The U.K. is likely to pull out of the European Union’s single market for goods and services and seek a new trading relationship with the bloc, Prime Minister Theresa May will say Tuesday, according to a person familiar with the matter.

“During Tokyo’s day, the market will be waiting for May’s speech, so concern about that is likely to lead to a risk-off mood,” said Shigeki Yoshitoshi, head of Japan foreign-exchange and commodities sales at Australia & New Zealand Bank Group Ltd. in Tokyo. For the dollar against the yen, “the heavy tone feels like it will continue,” he said.

  • USD/JPY drops 0.7% to 113.45 after declining to 113.37, lowest since Dec. 8; likely to trade between about 112 and 115 this week, according to Masashi Murata, currency strategist at Brown Brothers Harriman & Co. in Tokyo
  • Acceleration in dollar selling came as more media outlets picked up a WSJ story, which cited Trump as saying a Republican border tax plan was too complicated and the dollar was already too strong, spurring a pickup in algorithmic trading, said Simon Pianfetti, a trader at SMBC Trust Bank Ltd. in Tokyo
  • Tokyo importers all but done filling their USD/JPY bids down to 113.50, according to Asia-based FX trader
  • Benchmark U.S. 10-year yield falls 4bps to 2.354% after dropping 2bps last week. Trading in the securities was shut worldwide Monday for Martin Luther King Day
  • EUR/USD gains 0.6% to 1.0660, supported above 50-DMA
  • GBP/USD rises 0.6% to 1.2119 after dropping to 1.1986 Monday, lowest since Oct. 7 flash crash; pre-released extracts of May’s speech contained keywords that triggered algorithmic selling: trader
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