Dollar edges as Fed leadership speculation sends to US yields

© Reuters. FILE PHOTO: U.S. dollar notes to see the figure in this image

By Shinichi Saoshiro

TOKYO (Reuters) — The dollar rose slightly against his colleagues on Tuesday, supported by a rise in Treasury yields after a report that US President Donald Trump has favored a policy of hawk as the next head of the Federal Reserve.

Treasury yields rebounded from two-week lows and rose after a report on Monday that President Trump was favored by the Stanford economist John Taylor, as a rather radical as the current chair, Janet Yellen, to the top of the Fed.

«Taylor mention, came as a surprise, as he was lower on the list of rumors of Fed chief candidates, including (Fed Governor Jerome) Powell (former Fed Governor Kevin) Warsh, Yellen and (Trump’s top economic adviser Gary) Cohn,» said Shin Kadota, senior strategist at Barclays (LON:BARC) in Tokyo.

«However, it is also reported that Trump Yellen to meet on Thursday. News in relation to the Fed chairmanship is in constant change and the market finds it hard to move in the corresponding direction, up to some clarity.»

Trump Yellen to meet on Thursday in its search for a new candidate for your position, said a source familiar with the plans for the meeting.

The dollar index slightly up 0.05 percent against a basket of six major currencies (DXY) 93.365 after a rise of 0.25 per cent overnight.

The index had stooped to a 17-day low of 92.749 on Friday in the Wake of disappointing US inflation data.

«The dollar is under pressure as the Treasury yields declined last week. But it was allowed to rebound as a stronger Wall Street-good US data and the report about Taylor, all of which came in the place, to fall by stopping the yield,» said Junichi Ishikawa, a senior forex strategist at IG Securities in Tokyo.

The New York Fed’s business conditions index released on Monday showed its highest value since September 2014.

«The euro is likely to be the key to whether the dollar continues to be fixed. The European Central Bank is now said to be less radical than the market had initially last month thought, pushing German yields lower and in turn favors the dollar against the euro,» Ishikawa at IG Securities.

Ten-year yields in Germany a-month lows overnight, the extension moves seen at the end of last week on reports that the ECB’s policy largely in agreement on an expansion of asset purchases at a lower volume on your Oct. 26 meeting, with a view to the converging extension on a nine-month.

The greenback 0.1% lower at 112.070 yen, following a rise of 0.3 per cent overnight when it pulled away from a three-week low of 111.650.

The euro dipped 0.15 percent to $1.1780 after the loss of 0.25 percent on the previous day.

The Australian dollar was lost by 0.15 per cent lower at $0.7840 as its rally last week on a two-week high of $0.7898 on optimistic data from China momentum.

Sterling slipped 0.1 percent to $1.3241 , expects the Bank of England Governor Mark Carney ‘ s comments later in the session for possible clues.

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