Dollar remains at its highest level in 10 weeks as global sentiment remains fragile

TOKYO (Reuters) – The dollar rose slightly against a basket of its major rivals on Monday, a record 10 weeks after data showed that US economic growth was slowing less than expected and that the sentiment of risk was slow. the global scale remained fragile.

US currency has recently found support for safe haven purchases, as investor demand for riskier assets has weakened following sharp declines in global equity markets due to concerns over corporate profits , geopolitical uncertainties and global growth.

"The development of the US equity market is the main focus of the foreign exchange market," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

On Monday, the dollar index, which measures the performance of the greenback against a basket of six major currencies, rose 0.1% to 96.446. The index rose 1.4% this month.

Friday, it reached 96.860, its best level since August 15, after the data showed that the US economy had slowed down less than expected in the third quarter. But he later turned and finished on a 0.3% drop on the day.

Trade tensions between the United States and China, as well as the steady pace of Federal Reserve rate hikes, have boosted the dollar, which is a safe haven in times of turbulence and economic stress.

The strength of the US economy has also underpinned the dollar, although some weak corporate results have begun to cast doubt on growth prospects, particularly because of rising borrowing costs.

The euro plunged 1.1% to 1.1399 dollars, even as German Chancellor Angela Merkel's junior partners have left her Conservatives until next year to get more political results.

The common currency lost 1.8% this month because of worries about the Italian budget for free spending that would violate EU budget rules. Markets have been turbulent and Italian bond yields have skyrocketed since September, with the EU disapproving of Rome's budget plans.

Against the yen, the dollar remained stable at 111.90 yen.

The dollar weakened by 2.3% against the yen, which is also a safe haven in times of geopolitical turbulence, after reaching its 11-month high at 114.55 yen on 4 October.

Yukio Ishizuki, currency strategist at Daiwa Securities, said some market players, such as macro-focused hedge funds, have started buying riskier emerging currencies that were ravaged earlier this year.

"When financial markets in the US and around the world decline, emerging market currencies are generally sold," Ishizuki said.

"The truth is that some of the currencies that have experienced strong sales, such as the Brazilian real and the Turkish lira, are being redeemed," he said.

The MSCI Emerging Markets Currency Index edged up 0.2% Monday to trade 1.2% above the 11-month low of more than a year ago.

Right-wing legislator Jair Bolsonaro won the Brazilian presidential election on Sunday, promising to bring order into politics, reduce the state and crack down on crime, by turning away from the left in the fourth largest democracy in the world.

At 4:00 GMT, the real had still not been traded. Friday's session ended at 3.6426 for one dollar.

Yamamoto, of Mizuho, ​​expected traders to take long positions in the Brazilian real, which were widely resumed in the weeks leading up to Sunday's poll.

"It looks like the markets are waiting for the pension reform and budget deficit reduction under the Bolsonaro administration to progress," Yamamoto said.

"I think development on this front will be very slow or will encounter difficulties."