Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Dollar in doldrums as vaccines fan recovery bets

ForexFeb 16, 2021 06:30
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. U.S. one dollar banknotes are seen in front of displayed stock graph

By Tom Westbrook

SINGAPORE (Reuters) - The dollar fell to a three-week low on Tuesday, sterling hit an almost three-year high and commodity currencies rose as vaccination progress added to investors' recovery hopes.

The buoyant mood, and a sell-off in U.S. Treasuries, also dragged on the safe-haven Japanese yen, which fell through its 200-day moving average against the dollar and struck multi-year lows against the euro, Aussie and Swiss franc.

The yen last traded 0.2% lower at 105.53 per dollar. The dollar index, which measures the greenback against a basket of majors, fell 0.1% to 90.240, its lowest since Jan. 27 and the euro hit its highest since that date.

The dollar traded near milestone lows against other currencies. The risk-sensitive Australian dollar hit a one-month high of $0.7802 and the kiwi made a five-week peak of $0.7257.

"It's a risk-on, weaker-dollar mood taking over," said Bank of Singapore currency analyst Moh Siong Sim, as investors focus on a global bounce back in growth, inflation and spending.

He said investors were weighing up whether the recovery would be U.S.-led, which could support the dollar, or much broader, and thus negative for the greenback as global trade picks up.

"Things right now reflect greater comfort with the story of a synchronised global recovery, which is why we are seeing a weaker dollar," he said.

Sterling, which has led the charge, extended gains to hit $1.3946, its highest level since April 2018 as Britain leads the world in per-capita vaccination speed. The currency has gained almost 3% from early-February lows.

The euro crept 0.2% higher to $1.2150 to re-test recent resistance at that level. Rising oil prices lifted the Canadian dollar and Norwegian crown to multi-week highs.

Soaring bitcoin made a fresh record high of $49,938, but seems rangebound just below $50,000, as profit-taking pauses a steep rally that has driven the cryptocurrency more than 60% higher this year.

The Chinese yuan slipped 0.1% to 6.4132 per dollar after the Financial Times reported Beijing is exploring curbs on rare earth mineral exports in order to hurt the U.S. firms that use them.

YIELDS AND YEN

Besides the dollar, the Japanese yen has been the other casualty of the broad rally in financial markets, hitting a one-week low on Tuesday.

Recent equity gains - global stocks have climbed for a dozen days straight - have been matched by growing expectations for higher inflation, especially as central banks promise to keep rates low for a long time.

Those expectations were further boosted by a jump in oil prices this week, as a cold snap shuts Texan wells, and have driven U.S. Treasury yields to their highest since March.

That can affect the yen because Japanese investors are acutely sensitive to any rise in nominal U.S. yields, especially as they extend above anchored Japanese returns.

Benchmark 10-year U.S. yields are now 33 basis points higher for the year so far and the yen about 2% lower.

The yen also hit its lowest since late 2018 against the euro and the Australian dollar and hit a five-year low of 118.80 yen per Swiss franc.

"The yen has been the worst performing currency of 2021, with its negative correlation to U.S. Treasury yields proving to be the biggest dampening factor," said Francesco Pesole, currency strategist at Dutch bank ING in a note to clients.

"When adding weak safe-haven demand as the global recovery gathers pace, some additional trimming of yen net long positions may be on the cards."

Ahead on Tuesday, investors are looking to euro zone growth estimates, a German sentiment survey and U.S. manufacturing data to gauge the relative pace of the world's pandemic recovery.

Dollar in doldrums as vaccines fan recovery bets
 

Related Articles

Bitcoin extends downtrend, falls 12.1% to $47,176
Bitcoin extends downtrend, falls 12.1% to $47,176 By Reuters - Dec 04, 2021 5

(Reuters) - Bitcoin dived 12.14% to $47,176.09 on Saturday, losing $6,567.6 from its previous close. Bitcoin, the world's biggest and best-known cryptocurrency, is down 31.6%...

Bitcoin tumbles 5.5% to $53,436
Bitcoin tumbles 5.5% to $53,436 By Reuters - Dec 03, 2021

(Reuters) - Bitcoin plunged 5.5% to $53,435.9 at 22:04 GMT on Friday, losing $3,112.06 from its previous close. Bitcoin, the world's biggest and best-known cryptocurrency, is...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email