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The dollar is trying to rally on Wednesday, staying just above the seven-week low, and the low yield on US bonds has reduced the attractiveness of the yield on the currency.
The dollar as a safe haven has been given some respite as global stocks have pulled back from record highs as coronavirus outbreaks from India to Canada have tainted the prospects for a rapid global economic recovery.
Protective status also supported the yen, which climbed to a new seven-week high of 107.88 per dollar on Wednesday.
The dollar index, which tracks the US currency against its six major peers, stood at 91.254 in Asia after falling to 90.856 on Tuesday for the first time since March 3. It is down 2.1% this month.
The index “has broken through key short-term support at 91.30 and could show further decline to the 90s low,” with the euro rising to around $ 1.22, Westpac strategists wrote in a note to clients.
“We expected (the index) to peak in the third quarter when US manufacturing activity peaked and Europe began to show similarly strong macro numbers, but preliminary indications indicate that vaccinations in Europe are already picking up steam,” Westpac said. …
The single currency traded at $ 1.20275 after hitting a seven-week high of $ 1.2079 overnight.
The European Central Bank sets policy on Thursday, and the Federal Reserve and Bank of Japan next week.
The estimated 10-year Treasury yield was around 1.56%, close to its low since mid-March as it continued to consolidate after retreating from a 14-month high of 1.7760% reached late last month.
“Now that US Treasury yields have started to decline, people are closing short in the yen,” said Toru Sasaki, head of Japan’s market research at JPMorgan.
According to him, in the near future the yen may strengthen to 105 per dollar. At the end of last month, the Japanese currency fell to 110.97 for the first time in a year.
The drop in US and dollar yields in April signaled that the Fed will be slower to tighten monetary policy than the market thought, analysts say.
Some of the boost for the euro was the news that the European Union has received an additional 100 million doses of the COVID-19 vaccine produced by BioNTech and Pfizer.
In other parts of the financial world, however, the pandemic has sparked caution among investors.
India reported 1,761 COVID-19 deaths, the highest daily death toll, while Canada and the US have extended land border closures to overseas travelers.
Asian stocks declined in the wake of Wall Street, where travel stocks weighed on sentiment.
Oil fell, causing commodity prices to fall as well.
The Canadian dollar traded at 1.26110 Canadian dollars per dollar in Asia after its biggest drop in nearly two months on Tuesday. The Bank of Canada is due to announce its decision later Wednesday.
The Australian dollar, a barometer of risk appetite, fell 0.2% to $ 0.77057 after falling 0.4% overnight.
In cryptocurrencies, Bitcoin traded around $ 55,500, consolidating after falling to $ 51,541.16 on Sunday. On April 14, he set a record high of $ 64,895.22.