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SINGAPORE – The US dollar fell on Tuesday, with vaccine optimism raising the pound to an almost three-year high, while rising oil prices and optimistic expectations for the global recovery supported commodities and currencies exposed to the business. In trade diminished by the Lunar New Year holidays in China and the US holiday on Monday, the positive mood also weighed on the yen, which hit the US dollar in a week’s low and dropped to lows of more than two years in the euro and the Aussie.
The US dollar index, which measures the dollar against a basket of six major currencies, stood at 90,351, not much above Wednesday’s two-week low.
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The Chinese yuan, a favorite vehicle to play the dollar’s weakness in Asia, was on the verge of strengthening to more than 6.4 per dollar for the first time since mid-2018 and for the last time stood at 6.4033 in offshore trade.
The risk-sensitive Australian dollar remained close to Monday’s month-high of $ 0.7785.
The US dollar fell on Tuesday, with vaccine optimism raising the pound to a nearly three-year high, while rising oil prices and expectations of a global recovery supported commodities and currencies exposed to trade. (iStock)
“The dollar tends to underperform when you see this broad positive sentiment in the markets,” said Rodrigo Catril, senior foreign exchange strategist at National Australia Bank in Sydney.
“There are also inflationary pressures, particularly from energy prices,” he said, which is raising nominal yields – adding another weight to the yen as it may attract flows from Japan – but keeping real Treasury bond returns stable. .
Bitcoin hovered close to $ 50,000 when profit taking stopped the cryptocurrency’s sharp rise, which has raised it more than 60% in 2021 so far.
Yield on ten-year US Treasury bonds jumped five basis points to 1.2501% at the start of Asian trading on Monday, while most major currencies remained stable.
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The pound sterling, which exceeded $ 1.39 for the first time in almost three years on Monday, was at $ 1.3912. It also remained stable at 87.15 pence per euro, the highest value since May 2020.
The pound sterling gained up to 2.5% against the dollar in less than two weeks, as the aggressive implementation of Britain’s COVID-19 vaccination program raised expectations that its economy will be able to recover more quickly. than that of its European peers.
The euro was stable at $ 1.2132 on Tuesday, while the yen, which has fallen 2% so far this year, has fueled losses of 105.36 per dollar. The yen also hit its biggest low since the end of 2018 against the euro and the Australian dollar, and hit the biggest three-year low with the Swiss franc.
“The yen was the worst performing currency in 2021, with its negative correlation with US Treasury yields proving to be the biggest damping factor,” said Francesco Pesole, foreign exchange strategist at Dutch bank ING, in a note to customers.
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“By adding a weak demand for safe haven as the global recovery picks up, some further cuts in yen net long positions can be expected.”
On Tuesday, investors are looking at eurozone growth estimates, a German opinion poll and US manufacturing data to measure the relative pace of the global pandemic recovery.