The U.S. dollar found support on Wednesday after trading in the red for the last few days. The stock market’s slide frightened investors, and they decided to sell riskier currencies. Meanwhile, worries about Brexit caused the Sterling to tumble down to a new six-week low.
The greenback surged forward by nearly 2% against a basket of currencies, rising from the more than two-year lows it touched earlier in the month. The safe-haven Japanese yen also hit a one-week high of 105.83 per dollar.
Moh Siong Sim, the currency analyst in Bank of Singapore, noted that the tech sell-off had caught the market by surprise. Consequently, it is a bit jittery as to whether there are broader implications.
Despite the safe-havens’ rally, the risk-sensitive Antipodean currencies climbed up from two-week lows with the futures trade. The Australian dollar gained 0.2% at $0.7226, while the kiwi was steady at $0.6621.
What about the Sterling and the Euro?
The Sterling remained under pressure as traders feared that Britain is preparing to undercut its Brexit divorce treaty. The pound tumbled down by 0.2% to $1.2950, its lowest since the end of July. The British currency also fell to a six-week low of 90.57 pence against the Euro and 137.04 yen.
Meanwhile, the Euro traded at $1.1772 on Wednesday. It remains steady as investors await Thursday’s European Central Bank meeting with some trepidation.
The Euro has dropped by about 2% since hitting a 28-month high above $1.20 on Sept. 1. ECB chief economist Philip Lane said the exchange rate mattered to monetary policy, causing the currency’s downfall.
Furthermore, an overnight fall in the oil price dragged down oil exporters’ currencies. The Canadian dollar plummeted to a three-week low before steadying in Asia ahead of a Bank of Canada policy decision. Traders expect no changes to interest rates. The Norwegian krone dropped down as well, hitting a more than the six-week low of 9.1840 per dollar.