Dollar rises again as markets adjust to vaccine hope and higher yields
The U.S. dollar rose and the safe-haven yen weakened again on Wednesday as the markets continued to adjust to higher interest rates and prospects for economic growth following news on Monday of encouraging results for a coronavirus vaccine.
The euro fell to its lowest level against the dollar in a week as yields on U.S. bonds rise compared with those on European bonds. And, the New Zealand dollar soared to its strongest in a year and a half as traders scaled back bets that the central bank there would move to negative interest rates.
The yield on 10-year U.S. Treasury notes rose to 0.972% on Wednesday, up from 0.82% on Friday.
The dollar was up 0.5% on Wednesday against a basket of currencies after a flat day on Tuesday and a rise of 0.5% on Monday.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 92.991 after seeing levels above 93.1 earlier.
Tuesday’s pause in the dollar’s move showed continued restraint and caution about how beneficial the new vaccine will be and when. Coronavirus cases are increasing daily in the U.S. and Europe.
The euro was down 0.5% on the day to $1.175 against the dollar. The U.S. dollar rose 0.3% to 105.59 versus the Japanese yen.
The dollar gained 0.7% against the trade-sensitive Norwegian crown to 9.087. The Aussie dollar fell 0.3% to 0.7263.
Citi’s analyst says U.S. dollar could see ‘double-digit decline’ in 2021
Citi is taking a bearish view for the next 12 months and sees three big drivers of further potential sell-off of the greenback, says Ebrahim Rahbari, its global head of foreign exchange analysis.
Reference: CNBC, Investing
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