Dollar Down Over Rising U.S. Yields, Euro Gains as Vaccine Rollout Improves

Dollar Down Over Rising U.S. Yields, Euro Gains as Vaccine Rollout Improves

Investing.com – The dollar was down on Tuesday morning in Asia, remaining near a six-week low as the euro climbed on the back of a rallying COVID-19 vaccine rollout.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.14% to 90.927 by 1:23 PM ET (5:23 AM GMT), losing 2.5% from its five-month peak hit in March.

The USD/JPY pair inched up 0.02% to 108.18 after the dollar fell to as low as 107.975 yen, its weakest in more than six weeks.

The AUD/USD pair was up 0.48% to 0.7794 after hitting a one-month high of 0.7784 on Monday as the Reserve Bank of Australia released the minutes from its latest policy meeting earlier in the day. Across the Tasman Sea, the NZD/USD pair was up 0.42% to 0.7210.

The USD/CNY pair was down 0.21% to 6.4949, with the offshore Chinese yuan firming to 6.5075 per dollar, near its highest level in almost a month.

The GBP/USD pair inched up 0.10% to 1.3998.

The dollar had already been losing traction as U.S. bond yields have hovered below a 14-month peak touched last month, reducing the greenback’s yield attraction.

The euro rose to $1.2038, having touched a six-week high of $1.2048 on Monday while the British pound gained 1% overnight, its second-biggest daily gain so far this year, and last stood at $1.3989.

Some investors said support for the euro likely came from the announcement that the European Union has secured an additional 100 million doses of COVID-19 vaccine by BioNTech SE (F:22UAy) and Pfizer Inc. (NYSE:PFE)

“Europe is really the main region which is going to see accelerating vaccinations this quarter. And later in the year, we will see accelerating vaccinations, broadly, in emerging market economies,” Goldman Sachs (NYSE:GS) co-head of foreign exchange strategy Zach Pandl told Reuters.

“The U.S. got ahead of the curve in the first quarter, but other countries are going to be quickly catching up,” he added.

The greenback’s fall reverses the events of the first three months of 2021 when the dollar gained on the back of rising U.S. Treasuries yields. The benchmark 10-year U.S. Treasuries yield hit a one-month low of 1.529% during the week. Although it climbed up to 1.605% by Monday, it is below its March 2021 peak of 1.776%, when investors speculated the U.S. Federal Reserve could alter its dovish policy.

“One of the probably most important developments in macro markets over the last month has been a stability in U.S. rate. That also opens up room for dollar weakness against a broad set of currencies,” said Goldman’s Pandl.

In cryptocurrencies, bitcoin traded at $54,122, down 1.5% after four consecutive days of losses.

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