Dollar Attempts Recovery As China Hits Out At 'fake News' Report
Fahad Shabbir (@FahadShabbir) Published January 11, 2018 | 05:10 PM
The dollar recovered Thursday after China hit back over a "fake news" report that it could slow or halt purchases of US Treasuries
London, (UrduPoint / Pakistan Point News - 11th Jan, 2018 ) :The Dollar recovered Thursday after China hit back over a "fake news" report that it could slow or halt purchases of US Treasuries. The greenback had dived Wednesday against most rivals as Bloomberg News reported that Chinese authorities reviewing foreign-exchange holdings had recommended the move.
"The greenback is bouncing back as yesterday's story that China is considering trimming its purchases of US government bonds has been revealed as fake news," said CMC Markets UK analyst David Madden.
China's State Administration of Foreign Exchange denied the report, saying in a statement: "We think this story could be quoting a mistaken source or it could also be a piece of fake news." The report however briefly sparked fears on Wednesday that a huge amount of foreign demand for Dollars would dry up.
"'China has reduced their purchase of US treasuries' was the news which crashed the prices of the US Treasuries and pushed the dollar index lower yesterday," noted analyst Naeem Aslam at trading firm ThinkMarkets.
"But the Chinese officials clearly labelled this as fake news and assured markets that China is only diversifying its options.
" China has long invested heavily in US bonds as a way of controlling the value of its own Yuan Currency and Bloomberg News estimates it currently holds around $1.2 trillion in Treasuries, double what it owned 10 years ago.
"We do know that China is the largest buyer of the US Treasuries, and if there is any reduction in the Chinese appetite for the US Treasuries, it would have serious consequences for the global markets," cautioned Aslam.
Elsewhere on Thursday, European stock markets flatlined, but London briefly touched another record high despite retail gloom. The retail sector was hit by underwhelming Christmas trading updates from supermarket giant Tesco and clothing-to-food chain Marks & Spencer.
Tesco -- which is Britain's biggest retailer -- slid 4.39 percent to 202.60 pence. M&S sank 6.51 percent to 302.90 pence, topping the fallers board. "Retail stocks in the UK have been smashed," noted Manulife Asset Management equities analyst Will Hamlyn.
"They are so out of favour at the moment partly due to Brexit, partly due to the weak Christmas season (and) partly due to expected share losses to online" competition.
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