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U.S. Dollar Rises on Dovish Comments from More Central Banks; GBP Flat

3/28/2019, 4:29:06 PMMarket Analysis
U.S. Dollar Rises on Dovish Comments from More Central Banks; GBP Flat

The U.S. dollar rose on Thursday in Asia following more dovish comments from central banks. The British pound was flat after U.K. Prime Minister Theresa May said she would resign if Parliament supports her deal.

The U.S. dollar index that tracks the greenback against a basket of other currencies was up 0.2% to 96.410 by 11:50 PM ET (03:50 GMT).

Dovish comments from European Central Bank (ECB) President Mario Draghi sent worrying signals on slowing euro zone growth and provided a lift for the safe-haven dollar.

Earlier in the day, Draghi said the ECB could delay raising interest rates and still had other tools at its disposal to support the economy. But he admitted that the euro zone was experiencing a "persistent deterioration of external demand."

On Wednesday, the Reserve Bank of New Zealand (RBNZ) kept interest rates on hold at the outcome of its latest policy meeting, but said the “next rate move is likely down.”

Following the central bank’s unexpected change in its forward guidance, economists from ANZ said the RBNZ is likely to cut rates in November this year, while an earlier cut is also possible.

Meanwhile, the GBP/USD pair was little changed at 1.3187 after May promised to step down if lawmakers back her twice-rejected Brexit deal.

She has not given a specific date for her departure.

“I have heard very clearly the mood of the parliamentary party. I know there is a desire for a new approach – and new leadership – in the second phase of the Brexit negotiations – and I won’t stand in the way of that," May said.

Members of Parliament voted on Wednesday on eight possible Brexit options, but rejected all of them, leaving May’s deal, which was already rejected twice in House of Commons, the only one in play.

May is expected to bring a third vote to Parliament in the coming days, but has admitted she still lacks broad support.

The U.K. has until April 12 to reach a consensus on Brexit, which would need to be ratified by the EU. Without a deal, the U.K. could request a prolonged extension or leave without a deal.

The USD/CNY pair edged up 0.1% to 6.7295. The People's Bank of China (PBOC) set the yuan reference rate at 6.7263 vs the previous day's fix of 6.7141.

The USD/JPY pair lost 0.3% to 110.19.

The AUD/USD pair and the NZD/USD pair both rose 0.2%.