Dollar pulls back after skittling world currencies

Reuters: The dollar surged to a near 14-year high before pulling back on Thursday, clocking up records against a range of other top world currencies and skittling emerging markets.

Stronger data from the world’s biggest economy and thinner volumes on the US Thanksgiving holiday underpinned the dollar’s gains.

The dollar had eased off highs by midday after pushing its way past more of last year’s peaks against the euro to reach $ 1.0515, with only the March 2015 high of $ 1.0457 standing in the way of a drive toward parity. 

The yen had skidded to an eight-month low and China’s yuan to an 8-1/2 year low, while the highly sensitive Turkish lira and Indian rupee hit new troughs. 

“There doesn’t seem to be anything stopping US yields going higher in the near-term so I think people are going to stay on the dollar trend,” State Street Global Markets’ head of global macro strategy, Michael Metcalfe, said.

“The only risk to this are that the dislocations in markets outside of the US, particularly in emerging markets, get to a point where they start to feed back into concerns (for the Federal Reserve as it looks to raise interest rates),” he said.