Dollar near one-week top amid rise in yields, caution before ECB

  • 9/8/2021
  • 00:00
  • 15
  • 0
  • 0
news-picture

TOKYO (Reuters) - The dollar hovered near a one-week peak on Wednesday against major peers, buoyed by higher Treasury yields and a weaker euro amid caution before a European Central Bank policy decision. The dollar index, which measures the currency against six rivals, was little changed at 92.553, just below Tuesday’s high of 92.571, a level not seen since Sept. 1. The euro was almost flat at $1.18430 after dipping to $1.18375 in the previous session for the first time since Sept. 2. The greenback maintained its biggest gain in a month versus Japan’s currency from overnight, trading little changed at 110.28 yen after being lifted by higher U.S. yields. The benchmark 10-year Treasury note rose as high as 1.385% on Tuesday for the first time since mid-July, a climb of almost 6 basis points from Friday’s close. Monday was a U.S. holiday. The dollar index had tumbled to its lowest levels since early August at the end of last week, when a surprisingly soft U.S. payrolls report prompted speculation the Federal Reserve will forgo announcing a taper of stimulus at a policy meeting this month. The U.S. central bank may also have reason to pause with COVID-19 deaths surging in the country. Reuters data shows that more than 20,800 people died from the virus in the past two weeks, up about two thirds from the prior period. President Joe Biden will outline a plan to tackle the highly contagious Delta variant on Thursday. “Risk aversion in the air alongside the move up in UST yields have helped the USD extend its post-payrolls recovery,” Rodrigo Catril, a senior foreign-exchange strategist at National Australia Bank, wrote in a client note. “Investors are wary of the ECB meeting on Thursday, anticipating a potential trim to the PEPP (Pandemic Emergency Purchase Programme) bond-buying pace.” Analysts polled by Reuters see PEPP purchases falling possibly as low as 60 billion euros a month from the current 80 billion, before a further fall early next year and the scheme’s end in March. Elsewhere, the Reserve Bank of Australia’s decision on Tuesday to forge ahead with a taper of bond purchases while adding the dovish concession of extending the programme to February, helped undermine the Aussie dollar, which was little changed at $0.73885 on Wednesday, maintaining the previous session’s 0.7% slide. New Zealand’s kiwi also suffered overnight, trading little changed at $0.7107 following an almost 0.5% decline. Canada’s loonie was mostly flat at C$1.26415 per greenback after tumbling about 0.9% overnight. Lower oil prices weighed, while investors anticipate a dovish narrative from the Bank of Canada’s policy meeting later Wednesday following an unexpected economic contraction last quarter, NAB’s Catril said. Meanwhile, cryptocurrencies struggled on Wednesday to rebound from hefty losses suffered overnight, when several trading platforms saying they experienced performance issues, although it was not clear if these were a contributor to, or a result of, the volatility. Bitcoin traded around $47,000 after sinking as low as $42,900.01 on Tuesday. Earlier that day it had touched an almost four-month high of $52,956.47. Reporting by Kevin Buckland; Editing by Shri Navaratnam Our Standards: The Thomson Reuters Trust Principles.

مشاركة :