Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

FOREX-Dollar on defensive as risk sentiment recovers amid retreat in U.S. yields; Aussie gains

Published 03/03/2021, 02:57
Updated 03/03/2021, 03:00

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Kevin Buckland
TOKYO, March 3 (Reuters) - The safe-haven U.S. dollar
remained broadly weaker on Wednesday as Treasury yields
continued to retreat, restoring some calm to global markets and
reigniting demand for riskier assets.
Commodity-linked currencies including the Australian dollar
and the Norwegian krone held on to sizeable two-day advances.
The lower U.S. yields also sapped some of the dollar's
allure among fellow low-yielding currencies, with the yen and
Swiss franc bouncing off multi-month lows.
Bonds have been at the centre of a storm in financial
markets in recent weeks, following a dramatic jump in yields
globally – but led by Treasuries – in defiance of central
bankers' insistence on patience in normalizing monetary policy
as economies recover from the COVID-19 pandemic. Global stocks
were knocked from near record highs, and commodities prices
wobbled.
Fiscal stimulus has fueled market expectations for a rapid
recovery, with President Joe Biden close to passing a $1.9
trillion spending package. An index of the dollar =USD against six of its major peers
was little changed early in the Asian session Wednesday, after
dropping back from a nearly one-month high overnight.
The Aussie AUD=D4 rose 0.1% to $0.7824, following gains of
about 0.7% the previous two days. The currency got additional
support from gross domestic product data that topped analyst
forecasts.
The krone NOK= traded mostly flat after advancing about 1%
in each of the past two sessions.
"Risk sentiment dynamics are the key driver of currencies in
general right now," said Shinichiro Kadota, senior currency
strategist at Barclays Capital in Tokyo.
"Equity market reaction will be one of the key determinants
of the impact of this move in global rates on FX markets."
The lull in volatility could prove fleeting if an improving
U.S. economy reignites bond selling, with closely watched
monthly payroll figures are due on Friday. U.S. Federal Reserve Governor Lael Brainard stuck to recent
dovish rhetoric overnight, saying there is still a lot of ground
to cover on jobs and inflation. But she also said she is "paying
close attention" to bond market developments, where "the speed
of the moves caught my eye." Earlier Tuesday, the Reserve Bank of Australia had
recommitted to keeping interest rates at historic lows.
Meanwhile, European Central Bank board member Fabio Panetta
said the bloc's monetary authority should expand bond purchases
or even increase the quota earmarked for them if needed to keep
yields down. The euro was little changed at $1.20910 EUR= after rising
more than 0.3% in the previous session, when it rebounded from
an almost one-month low below $1.20.
The dollar added 0.1% to 106.810 yen JPY= , another
safe-haven currency, consolidating after retreating from the
cusp of 107 overnight, a level unseen since August.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.