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SINGAPORE – The US dollar stalled on Tuesday as the optimistic vaccine lifted the British pound to a near-three-year high, while rising oil prices and lively expectations for global recovery support the trade and trade-exposed currencies. In trade diluted by the New Year holiday in China and Monday’s US holiday, the positive mood also weighed on the safe haven yen, which made the dollar a week lower overnight and dropped to more than two years lower than the euro has. the Aussie.
The US dollar index, which measures the dollar against a basket of six major currencies, stood at 90,351, not far above a two-week low it reached last Wednesday.
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The Chinese yuan, a preferred remedy for the weakness of the dollar in Asia, was on the verge of strengthening 6.4 per dollar for the first time since mid-2018 and last stood at 6.4033 in foreign trade.
The risk-sensitive Australian dollar is held at a one-month high of $ 0.77785 on Monday.
The US dollar was pegged on Tuesday as the optimistic vaccine raised the British pound to a near-three-year high, while rising oil prices and lively expectations for global recovery support the commodity and trade-exposed currencies. (iStock)
“The dollar tends to underperform when you see this broad positive sentiment in markets,” said Rodrigo Catril, senior currency strategist at National Australia Bank in Sydney.
“There is also inflationary pressure, especially due to energy prices,” he said, which increases nominal yields – which add another weight to the yen because it could attract flows from Japan – but stabilize real treasury yields. keep.
Bitcoin hovered just under $ 50,000 as profit-taking disrupted the steep rally of the cryptocurrency, which so far in 2021 was more than 60% higher.
Yields on the ten-year-long U.S. treasury jumped five basis points to 1.2501% in early Asian trading on Monday, while most major currencies remained stable.
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Sterling, which broke past $ 1.39 for the first time in almost three years on Monday, was $ 1.3912. It also held steady at 87.15 pence per euro, the highest since May 2020.
Sterling rose as much as 2.5% on the dollar in less than two weeks as the aggressive implementation of Britain’s vaccination program COVID-19 raised expectations that its economy would recover faster than its European counterparts. .
The euro was stable at $ 1.2132 on Tuesday while the yen, which has fallen 2% so far this year, posted losses at 105.36 per dollar. The yen also hit its lowest level since late 2018 against the euro and Australian dollar, hitting a three-year low on the Swiss franc.
“The yen was the weakest currency in 2021, and the negative correlation with US Treasury yields appears to be the biggest dampening factor,” Francesco Pesole, currency strategist at Dutch bank ING, told clients in a note.
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“If there is a weak demand for safe havens added as global recovery increases, some additional positions on yen net long positions may be available.”
Ahead of Tuesday, investors are looking at eurozone growth forecasts, a German sentiment survey and US manufacturing data to determine the relative pace of the world’s recovery from the pandemic.