Schedule euro to dollar at intervals of 4 hours
The dollar remains close to multi-week lows against most major currencies on Thursday as declining US Treasury yields have weakened the dollar’s interest rate advantage.
The euro was in the spotlight ahead of a European Central Bank (ECB) meeting later Thursday, where any positive comments on the economic outlook or hints of a cut in bond purchases are expected to trigger the upward surge in the single currency.
Sentiment against the dollar eased as the surge in Treasury yields replaced last month with a slowdown, but some analysts say the long-term outlook remains positive thanks to a strong US economy and an improved coronavirus vaccination program.
“We clearly saw that the demand for Treasury bonds is good, which means there is no upward pressure on yields,” said Junichi Ishikawa, senior currency strategist at IG Securities in Tokyo.
“In these conditions, the dollar will experience a drop against the yen. With the euro, things are different because there are signs that people at the ECB are more optimistic about the economy, which raises questions about the phasing out of stimulus. ”
The dollar fell slightly to 107.93 yen, close to a seven-week low.
The euro was quoted at $ 1.2033, which was close to its highest level since March 3.
The British pound was bought at $ 1.3931.
The continental yuan rose to 6.4828 per dollar, hitting its highest level since March 12.
On Wednesday, a closely watched auction of 20-year US Treasuries sparked strong demand, helping the fixed-income market regain calm and limit yields.
Last month, Treasury yields rose to their highest level in more than a year on fears of accelerating inflation, prompting dollar bulls to buy more currency.
However, this trading strategy began to falter this month as the rate of return shifted and investors will now look for new trading signals at the US Federal Reserve Board next week.
The ECB is not expected to change monetary policy at its meeting on Thursday, but analysts say that meeting will set the stage for June, when policymakers will have to decide whether to slow down bond purchases.
Dutch central bank governor Klaas Knot has already said that a cut in purchases is possible and that the euro could resume gains against the dollar, analysts said, if there is any sign that a cut in bond purchases will receive more support from the ECB.
Monetary policy has received renewed attention after the Bank of Canada announced that it could start raising interest rates in late 2022 after it slows down its bond purchases, making it the first G7 central bank to take steps to abolish extraordinary incentives.
The Canadian dollar, which rose to a six-week high on Wednesday, was last quoted at 1.2510 against the US dollar.
The Aussie and New Zealand dollar traded near monthly highs against the US dollar, fueled by rumors that their central banks are more likely to follow Canada’s lead as the economic outlook improves.