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Dollar wallows near one-week low as bond yields retreat
The commodity-linked Australian and New Zealand dollars traded close to one-week highs reached overnight as inflation fears ebbed, sending Wall Street stocks to record highs.
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A Chinese bank employee counts 100-yuan notes and US dollar bills at a bank counter in Nantong in China's eastern Jiangsu province on August 6, 2019. - The Chinese currency steadied on August 6, a day after Beijing let the yuan weaken against the dollar, sending markets into freefall and leading the US to formally designate China a (STR/AFP/-)
T
he safe-haven dollar languished near a one-week low on Friday as calming bond markets lifted investor sentiment and appetite for Asian currencies.
The commodity-linked Australian and New Zealand dollars traded close to one-week highs reached overnight as inflation fears ebbed, sending Wall Street stocks to record highs.
Cryptocurrency bitcoin briefly rose above $58,000, approaching a record high.
The dollar index wallowed just north of the 91.364 level touched overnight for the first time since Feb. 4. It has dropped around 0.6 percent this week, after retreating from a more than three-month high of 92.506 reached Tuesday.
The gauge remains 1.6 percent higher this year as it tracked benchmark 10-year Treasury yields from below 1 percent to as high as 1.625 percent at the end of last week, before their retreat to around 1.5 percent currently.
A benign consumer price index reading this week helped allay fears that increased fiscal stimulus and sustained ultra-easy monetary policy could lead the US recovery to overheat.
Weekly employment data overnight, meanwhile, added to positive signals from the jobs market, as President Joe Biden signed his $1.9 trillion pandemic relief bill into law.
"Risk sentiment is back in the ascendancy," Ray Attrill, head of forex strategy at National Australia Bank, wrote in a client note.
"A 1.5 percent rather than 1 percent 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."
The Aussie traded at $0.77865, on the cusp of the one-week high of $0.7793 reached Thursday. New Zealand's kiwi changed hands at $0.7223, near the one-week high of $0.7240 from overnight.
The euro also traded close to a one-week high of $1.1990.
On Thursday, the European Central Bank said it was ready to accelerate money-printing to keep eurozone yields down.
The dollar consolidated at around 108.60 yen, another safe-haven currency, after pulling back from a nine-month high of 109.235 reached on Tuesday.
Bitcoin last traded at $57,185.71, up more than 12 percent for the week, after topping $58,000 on Thursday for the first time since it set a record high at $58,354.14 on Feb. 21.
