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Dollar Up, but Remains Near One-Week Low as Bond Yields Drop

ForexMar 11, 2021 11:20PM ET
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By Gina Lee – The dollar was up on Friday morning in Asia but remained near a one-week low as calmer bond markets boosted investor sentiment and risk appetite overall.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.15% to 91.555 by 11:12 PM ET (4:12 AM GMT).

The dollar index kept near the 91.364 level reached during the previous session for the first time since Feb. 4. It has dropped around 0.6% during the past week, after retreating from a more than three-month high of 92.506 reached on Tuesday.

The USD/JPY pair was up 0.21% to 108.72. The dollar consolidated against the yen, a fellow safe-haven currency, after pulling back from a nine-month high reached on Tuesday.

The AUD/USD pair inched down 0.03% to 0.7784 and the NZD/USD pair inched down 0.08% to 0.7219. New Zealand lifted the remaining restrictions in Auckland, its largest city, after no locally transmitted COVID-19 cases were reported for two weeks, Prime Minister Jacinda Ardern said on Friday.

The USD/CNY pair inched down 0.09% to 6.4875 and the GBP/USD pair inched down 0.06% to 1.3982.

The index remains 1.6% higher in 2021, following ten-year Treasury yields that rose from below 1% to as high as 1.625% at the end of the previous week. Yields have since retreated to around 1.5% after auctions of ten-year Treasury benchmark and 30-year notes were successfully concluded.

Investors cheered as U.S. President Joe Biden signed a $1.9 trillion stimulus package into law, ahead of schedule and a day after the House of Representative gave its final approval on Wednesday.

On the data front, Wednesday’s core consumer prices data also eased fears that massive fiscal stimulus and continuous ultra-easy monetary policy could lead to runaway inflation. Fewer Americans claimed unemployment benefits than expected, with 712,000 claims filed over the past week against the 725,000 claims in forecasts prepared by and the 754,000 claims recorded during the previous week.

“Risk sentiment is back in the ascendancy … a 1.5% rather than 1% risk-free rate is evidently no longer a problem for risk assets,” although for the dollar, “it still looks a bit premature to call a resumption of the 2020 downtrend with any degree of conviction,” National Australia Bank (OTC:NABZY) head of forex strategy Ray Attrill said in a note.

The euro also traded close to a one-week high, after the European Central Bank pledged to accelerate money-printing to keep yields down as it handed down its policy address on Thursday.

In cryptocurrencies, Bitcoin briefly rose above $58,000, near a record high. It last traded at $57,185.71, up more than 12% for the week, after rising past the $58,000 mark on Thursday for the first time since its record high of $58,354.14 set on Feb. 21.

Dollar Up, but Remains Near One-Week Low as Bond Yields Drop

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