Dollar rebounds from 4-week lows as risk appetite recovers

Frankfurt (Nov 16)  The dollar rebounded from four-week lows against the yen on Thursday, as global markets regained some of their risk appetite after a sharp sell-off in stocks and the greenback over the past week.

As share prices rebounded across Asia and Europe, the dollar climbed around 0.2 percent to 113.09 yen , up from lows of 112.47 yen on Wednesday.

But against a basket of currencies, the greenback was flat , having fallen to its lowest in almost four weeks on Wednesday - a severe correction from the uptrend that began in early September on hopes of a tax cut deal.

"Stocks (have) pulled back up and that's come as some reassurance for risk appetite," said Rabobank currency strategist Jane Foley, in London.

Foley said hawkish comments late on Wednesday from Boston Federal Reserve President Eric Rosengren, who said the Fed should continue to raise interest rates, including next month, had also helped the dollar. But concerns over U.S. tax reform plans were keeping it under pressure. A U.S. Senate Republican tax plan drew fire from two Republican lawmakers on Wednesday in a possible sign of trouble for the sweeping measure, given the party can afford to lose no more than two votes to pass the legislation. "For the moment, the U.S. tax cuts will be the main theme of the markets. I would expect negotiation to drag on beyond the year-end but by the first quarter of next year, there will be a deal," said Yukio Ishizuki, senior strategist at Daiwa Securities.

Reuters