NEW YORK (Reuters) - The dollar was little changed on Thursday, on track to post a fourth straight month of gains, as the trade stand-off between China and the United States prompted traders to put money into perceived safe currencies including the greenback.
Safe-haven demand lifted the dollar to a 2-year high against a basket of currencies last week. Appetite for the greenback was somewhat curbed on Thursday as Wall Street stabilized following steep losses due to the trade worries and U.S. bond yields briefly rose before resuming their recent fall.
The euro and sterling held above key support levels at $1.11 and $1.26, respectively, also restraining the greenback’s momentum, analysts said.
“With the U.S.-China trade situation, people don’t want to do anything until there’s a resolution,” Joseph Trevisani, senior analyst at FX Street, said of this week’s light volume and tight trading ranges.
In late U.S. trading, an index that tracks the dollar against six major currencies was down -0.01% at 98.151. It reached 98.371 a week ago, its strongest since May 2017.
The S&P 500 was down 0.08%, wiping out initial gains, while the benchmark 10-year U.S. Treasury note yield was 1.2 basis points lower at 2.224%, reversing an earlier rise.
The dollar index has increased 0.76% in May, putting it on track for four straight months of gains. Its strength has persisted even as traders have increased their bets on multiple rate cuts by the Federal Reserve.
The greenback will likely extend its monthly winning streak against the euro, which began in January.
Signs of a sagging euro zone economy, together with worries about the rise of euro-sceptic political parties within EU member countries, have hurt the zone’s common currency.
The euro was up 0.04% at $1.1135, within striking distance of $1.11055 hit a week ago, which was a two-year low.
The dollar has also remained resilient against the yen, despite the risk-averse environment.
The greenback was 0.05% lower at 109.535 yen, staying above a two-week low set on Wednesday.
Analysts said the yen, a safe-haven currency backed by Japan’s status as the world’s biggest creditor nation, remained relatively weak because of domestic demand for dollars.
“As there’s persistent yen selling and dollar buying from Japanese investors when the rate approaches the 109.10 yen per dollar level, it’s not easy for the yen to rise above the 109 level,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
Sterling was poised for the biggest monthly drop against the dollar in a year as the imminent departure of Theresa May as prime minister deepened fears about a chaotic exit for Britain from the European Union.
On Thursday, the pound was 0.13% lower at $1.261, while the euro was up 0.17% at 88.31 pence.
Additional reporting by Saikat Chatterjee in LONDON and Daniel Leussink in TOKYO; editing by Larry King and James Dalgleish