FOREX-Dollar hovers near one-month lows as sentiment upbeat

  • 9/7/2021
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* Graphic: World FX rates tmsnrt.rs/2RBWI5E LONDON, Sept 7 (Reuters) - The dollar held near a one-month low on Tuesday as softer Treasury yields and upbeat Chinese economic data boosted sentiment, with the euro and the Canadian dollar retracing most of their overnight losses versus the U.S. currency. While trading ranges remained narrow thanks to a U.S. holiday, broader sentiment was unmistakably upbeat as traders bet weak U.S. data would keep the Federal Reserve from unwinding its tapering plans. “Investor risk sentiment has improved as evident by global equity indices rising to fresh record highs and at the same time short-term U.S. yields have dropped back as market participants have scaled back further expectations for Fed rate hikes as soon as next year,” MUFG strategists said in a daily note. Against a basket of its rivals, the dollar steadied at 92.23 and within striking distance of an early August low of 91.941 hit on Friday. Two-year U.S. Treasury yields have fallen nearly five basis points over the past week as Fed Chair Jerome Powell’s dovish speech at Jackson Hole Symposium last month, received a further boost from a surprisingly soft U.S. payrolls report on Friday. The euro changed hands at $1.1884, a tad below Friday’s one-month peak of $1.1909 but still well-supported ahead of the European Central Bank’s policy meeting on Thursday. The ECB is seen debating a cut in stimulus with analysts expecting purchases under the ECB’s Pandemic Emergency Purchase Programme (PEPP) falling possibly as low as 60 billion euros a month from the current 80 billion. The Australian dollar was the only currency that was somewhat volatile in Asian trading after the central bank stuck with plans to taper its bond buying but said it would extend the timeline as the economy struggles with coronavirus lockdowns. Reporting by Saikat Chatterjee; Additional reporting by Hideyuki Sano in TOKYO; Editing by Raissa Kasolowsky Our Standards: The Thomson Reuters Trust Principles.

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