* Risk appetite returns as strong earnings lift Wall Street
* Euro firmer against dollar ahead of ECB policy decision
* Musk hints Tesla will accept bitcoin as payment again
By Kevin Buckland
TOKYO, July 22 (Reuters) - The safe-harbour U.S. dollar and
yen were on the back foot on Thursday, after pulling back from
multi-month highs amid a recovery in risk appetite as strong
earnings lifted Wall Street stocks.
Cryptocurrencies held gains after Tesla Inc CEO
Elon Musk said the company would "most likely" resume accepting
bitcoin for payment.
The dollar index, which measures the currency against
six major peers, stood at 92.770 after pulling back from a 3
1/2-month high of 93.194 touched on Wednesday.
The yen traded at 129.950 per euro, from an
almost four-month top of 128.610 earlier this week, and at 81.07
to Australia"s dollar, from a 5 1/2-month peak of
79.85.
"Strong earnings have swept away Delta concerns in the
U.S.," weighing on haven currencies, National Australia Bank
analyst Tapas Strickland wrote in a note to clients.
"The consensus is that (the Delta strain) does not pose an
immediate risk to the recovery," delaying reopening by three
months at the most as countries ramp up vaccination drives in
response, he said.
Sterling traded at $1.3717, recovering from a 5
1/2-month trough of $1.35725 reached on Tuesday, despite rising
Delta variant cases in Britain and confusion about the lifting
of restrictions in England.
The Aussie changed hands at $0.7350, from an
eight-month low of $0.72895 the previous day, even as
coronavirus cases spiked despite half the Australian population
being under lockdown.
The euro stood at $1.1789, rising off Wednesday"s
3-1/2-month low of $1.1752 ahead of a closely watched European
Central Bank policy decision later in the global day.
Policymakers will implement for the first time changes to
their strategy and are all but certain to promise an even longer
period of stimulus to make good on its commitment to boost
inflation.
Analysts generally see ECB dovishness weakening the euro
over the medium-term.
"On balance, the ECB’s new inflation target suggests
monetary policy will remain ultra-accommodative for an even
longer period of time," which will act as a headwind for the
euro, Commonwealth Bank of Australia strategists Kim Mundy and
Carol Kong wrote in a research note.
"Indeed, we expect the ECB will be one of the last central
banks under our coverage to tighten policy."
In cryptocurrencies, bitcoin held Wednesday"s
7.9% jump - the biggest since mid-June - to trade just north
of$32,000.
Rival ether traded slightly below $2,000
following a 12% surge.
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Currency bid prices at 0525 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar $1.1796 $1.1789 +0.06% -3.45% +1.1801 +1.1788
Dollar/Yen 110.1350 110.2850 -0.12% +6.64% +110.2900 +110.0900
Euro/Yen
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