SINGAPORE- The dollar crept higher on Wednesday as top executives from the biggest US banks warned of an impending recession, which dampened risk appetite and kept the greenback supported.
Top bankers from JPMorgan Chase & Co, Bank of America and Goldman Sachs said overnight that the banks are bracing for a worsening economy next year, as inflation threatens consumer demand.
Against the dollar, sterling fell 0.4 percent overnight, and was last 0.05 percent lower at $1.2128.
The greenback rose 0.16 percent overnight against the Japanese yen, but erased some of those gains in early Asia trade and fell 0.04 percent to 136.97 yen.
“We’ve been forecasting a recession in the US, the UK, the euro zone and Japan … It’s part of our baseline,” said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.
“(That) will provide more support to the US dollar, as a safe-haven currency.”
Against a basket of currencies, the US dollar index was last 0.05 percent higher at 105.60.
It had risen nearly 0.3 percent overnight, extending a brief rally for a second straight session after upbeat US services and factory data released at the start of the week pointed to underlying momentum in the world’s largest economy.
This supported the view that while the Federal Reserve may scale back the pace of its rate hikes, US rates will remain higher for longer.
Elsewhere, the euro was last 0.13 percent lower at $1.0460.
Two European Central Bank (ECB) officials had signaled that inflation and rates may be close to peaking, ahead of the ECB’s monetary policy meeting next week.
The Aussie was last 0.16 percent higher at $0.6699, after a muted reaction following data release of its gross domestic product on Wednesday, which showed that Australia’s economy slowed a little in the September quarter.
