FOREX-U.S. dollar, yen climb as Delta variant crushes risk sentiment

  • 7/19/2021
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* Aussie, Canadian, NZ dollars fall vs greenback * Sterling hits 3-month low vs dollar * Dollar supported by risk aversion * Bitcoin tests $30,000 support * Graphic: World FX rates tmsnrt.rs/2RBWI5E (Adds new comment, bitcoin, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, July 19 (Reuters) - The safe-haven U.S. dollar, yen and Swiss franc rose on Monday as investors grew nervous about a raging coronavirus variant that could threaten the outlook for a global economic recovery. The three currencies firmed as benchmark U.S. 10-year Treasury yields dropped to a more than five-month low of 1.176%. The greenback climbed to a more than three-month peak against a basket of major currencies, but has come off its highs as the yen and Swiss franc advanced with the decline in risk appetite. The U.S. dollar though remained sharply higher against risk-sensitive currencies such as the Australian, Canadian and New Zealand dollars. The yen climbed to its highest in 1-1/2 months versus the dollar. The Delta variant of COVID-19 is now the dominant strain worldwide, accompanied by a surge of deaths around the United States almost entirely among unvaccinated people, U.S. officials said on Friday. "The wall of worry is being built," said Christopher Vecchio, senior analyst at DailyFX.com, the research unit of forex broker IG. "Lower equities, lower yields, strength in the Japanese yen and the U.S. dollar all amount to a significant risk-off impulse in markets." In afternoon trading, the dollar index, which measures the greenback"s value against six major currencies, rose to its highest since April 5. It was last up 0.2% on the day at 92.855. As a result of global uncertainty related to the coronavirus variant, U.S. rates markets have also reduced their expectations on Federal Reserve tightening in 2022 and 2023. "Rates markets don"t seem to think any Fed action is imminent, particularly as Delta variant concerns surge," said Vecchio, Fed funds futures, which track short-term rate expectations, showed the chances of a quarter-point hike by the Fed in December 2022 dropped to 58% on Monday from 90% on July 13, when the consumer price index was released. The likelihood that the Fed raises rates in January 2023 fell to 70% from 100% last Tuesday. The dollar was also firmly higher against commodity currencies. It rose more than 1% against the Canadian dollar to C$1.2759. The Aussie dollar dropped 1% versus the greenback to US$0.7328 , while the New Zealand dollar fell 0.9% to US$0.6932. The yen surged on Monday, rising to its highest since late May, which pushed the greenback lower and was last down 0.6% at 109.44 yen. The Swiss franc gained as well, dragging the dollar down 0.2% to 0.9180 franc The pound was down 0.7% at $1.3671 after UK Health Minister Sajid Javid announced over the weekend he tested positive for COVID-19 and was in self-isolation. That forced Prime Minister Boris Johnson and Finance Minister Rishi Sunak into quarantine, pushing sterling down to a three-month trough against the dollar earlier in the session. The euro was down 0.1% at $1.1797, after dropping to a three-month low of $1.1764, ahead of this week"s European Central Bank meeting. In cryptocurrencies, bitcoin was testing key support of $30,000 and was last down 3.4% at $30,710 . ======================================================== Currency bid prices at 2:28PM (1828 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 92.8090 92.6590 +0.18% 3.143% +93.0410 +92.6270 Euro/Dollar $1.1801 $1.1805 -0.04% -3.42% +$1.1824 +$1.1764 Dollar/Yen 109.4400 110.0800 -0.58% +5.92% +110.0950 +109.0700 Euro/Yen 129.13 129.96 -0.64% +1.74% +129.9700 +128.9000 Dollar/Swiss 0.9178 0.9197 -0.17% +3.78% +0.9221 +0.9163 Sterling/Dollar $1.3673 $1.3764 -0.66% +0.08% +$1.3767 +$1.3663 Dollar/Canadian 1.2756 1.2621 +1.09% +0.19% +1.2807 +1.2614 Aussie/Dollar $0.7335 $0.7401 -0.88% -4.63% +$0.7403 +$0.7328 Euro/Swiss 1.0830 1.0852 -0.20% +0.21% +1.0862 +1.0827 Euro/Sterling 0.8630 0.8572 +0.68% -3.44% +0.8641 +0.8565 NZ $0.6938 $0.7000 -0.89% -3.38% +$0.7004 +$0.6922 Dollar/Dollar Dollar/Norway 8.9500 8.8575 +1.11% +4.30% +8.9615 +8.8695 Euro/Norway 10.5609 10.4553 +1.01% +0.90% +10.5789 +10.4225 Dollar/Sweden 8.6854 8.6755 +0.02% +5.97% +8.7271 +8.6692 Euro/Sweden 10.2491 10.2466 +0.02% +1.72% +10.2691 +10.2443 (Reporting by Gertrude Chavez-Dreyfuss; Editing by William Maclean, Andrea Ricci and Richard Chang)

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