Dollar Up, But Remains Near One-Month Low as U.S. Yields Retreat

Dollar Up, But Remains Near One-Month Low as U.S. Yields Retreat – The dollar was up on Monday morning in Asia but remained near a one-month low as Treasury yields hovered near their lowest levels in five weeks after the U.S. Federal Reserve reiterated its view that any spike in inflation will be temporary.

Improved risk sentiment amid a rally in global shares to record highs also capped gains for the U.S. currency.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.11% to 91.648 by 12:30 AM ET (4:30 AM GMT), hovering near the low of 91.484 hit during the previous week in a level not seen since Mar. 18.

The USD/JPY pair edged down 0.11% to 108.66.

The AUD/USD pair was inched up 0.01% to 0.7734, with the Reserve Bank of Australia releasing the minutes from its latest meeting on Tuesday. Meanwhile, the NZD/USD pair inched down 0.01% to 0.7140.

The USD/CNY pair inched up 0.07% to 6.5249 and the GBP/USD pair inched up 0.05% to 1.3837.

“The fixed income market will dominate my world this week,” with the risk currently skewed to further yield declines, pressuring the greenback, Pepperstone Markets Ltd head of research Chris Weston said in a note.

Wall Street’s gains amid low volatility “should keep USD rallies contained and attract further USD sellers” as benchmark 10-year yields could fall to as low as 1.47% from around 1.56% currently, the note added.

The 10-year Treasury yield sank to as low as 1.5280% during the previous week from a more-than-one-year high of 1.7760% at the end of March, thus reducing the appeal of the U.S. as an investment.

Meanwhile, U.S. Federal Reserve Governor Christopher Waller told CNBC on Friday that the U.S. economy “is ready to rip” as COVID-19 vaccinations continue and economic activity picks up. He also added that a rise in inflation is likely to be transitory, echoing comments from other Fed officials including Chair Jerome Powell during the previous week.

Bitcoin continued a retreat from its record high of $64,895.22 reached on Apr. 14 as it fell over the weekend. A blackout in China’s Xinjiang region, which powers a lot of bitcoin mining, was reportedly responsible for the selloff, according to data website CoinMarketCap.

Analysts at National Australia Bank (OTC:NABZY) cited “speculation in several online reports” that the U.S. Treasury could crack down on money laundering within digital currencies for the sharp drop.

The Central Bank of the Republic of Turkey’s decision to ban the use of cryptocurrencies for purchases also contributed to cryptocurrencies’ fall.

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