NEW YORK — The dollar rose against the safe-haven yen yesterday after a slight easing of tension around Syria helped push US Treasury yields higher.
Market sentiment was still cautious, but the prospects of an imminent Western attack on Syria over chemical weapons weakened, given opposition in Britain and among US lawmakers.
US Treasury yields, which fell in recent days as investors sought refuge in low-risk government debt, rose, increasing the dollar’s appeal.
The dollar was up 0,6% at 98,19 yen, recovering from Wednesday’s trough of 96,81, which was its lowest since August 12. It was up.
DXY was up 0,4% against a basket of currencies at 81,759.
Some said the reduced tension in emerging markets assets also supported the US currency as it reinforced expectations the US Federal Reserve would begin to reduce monetary stimulus soon.
“A slight easing of the tensions in Syria and emerging markets, has helped the dollar,” Simon Derrick, head of currency research at Bank of New York Mellon, said.
“The dollar being a safe haven depends on the circumstance. Over the last few weeks tensions in emerging markets was seen as keeping pressure on the US Federal Reserve to delay tapering which is dollar negative. With emerging markets now doing a little better, the dollar is higher.”
Markets will be focusing on US initial jobless claims figures and the revision to growth figures from the second quarter, with some traders saying they are positioning for encouraging data and this is supporting the dollar.
Against the buoyant dollar, the euro was down 0,6% at $1,3268.
“We expect the dollar to regain support against the majors as risk aversion eases, allowing some stabilisation in risky asset markets and potentially providing some relief to emerging currencies. Safe-haven currencies (Swiss franc and yen) are likely to come back under pressure as a result,” analysts at Morgan Stanley said.
First hit by outflows of funds as investors positioned for an eventual end of Fed easy money, emerging market pain has been exacerbated as tensions in Syria made investors even more risk averse.