FOREX-Dollar on back foot as market optimism lifts riskier currencies

  • 2/15/2021
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* Graphic: World FX rates tmsnrt.rs/2RBWI5E LONDON, Feb 15 (Reuters) - The safe haven dollar started the week pinned near two-week lows on Monday, as optimism about COVID-19 vaccine rollouts and a planned $1.9 trillion U.S. stimulus package drove up riskier currencies and stock markets across Europe and Asia. Among the gainers versus the weaker greenback, the British pound broke $1.39 for the first time in nearly three years while commodity currencies strengthened, including the South African rand which hit a fresh one-year high. The improved risk appetite was also reflected in equities, with European indexes rising after Japanese stocks surged to a more than 30-year high earlier in the day. Many financial markets in Asia remained closed on Monday for Lunar New Year, while U.S. stock markets will be shut for Presidents Day. The dollar index slipped 0.1%, close to last week’s low of 90.249 - a level unseen since Jan. 27. Analysts at MUFG said the dollar could weaken further if market optimism held. “We believe there is plenty yet to go in the so-called ‘reflation trade’ with market participants under-estimating the willingness of global policymakers to let the economy run hot and fuel stronger than expected global growth through the remainder of the year,” the analysts said in a note. Bitcoin remained volatile, retreating to as low as $45,914.75 a day after reaching a record $49,714.66. The world’s most popular cryptocurrency had rallied 25% last week, boosted by endorsements from Tesla and BNY Mellon . The Chinese yuan reached its strongest level since June 2018 at 6.4010 per dollar in the offshore market. The euro edged 0.2% higher to $1.21410, extending last week’s 0.6% advance. The dollar rose a third of a percent to 105.28 yen , recovering some of the previous week’s losses.

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