Dollar slide continues, yuan rally gets attention
The dollar extended its nearly two-month slide against major peers on Tuesday as U.S. interest rates fell on U.S. Federal Reserve arguments for easy monetary policy despite current inflationary forces.
The dollar weakness came as U.S. Treasury yields fell to fresh multi-week lows and the yield curve flattened after an auction of two-year notes attracted solid demand.
The dollar index against major currencies was off 0.2% in the afternoon in New York at 89.646. Early in the day it fell to 89.533, the lowest since Jan. 7.
The euro climbed to January levels and was last up 0.3% on the day at $1.2253.
Strategists have said the dollar is likely be weak against many currencies until markets see stronger U.S. economic data and interest rates. Stronger data could come on Friday with new readings on U.S. core consumer prices in April and a survey of purchasing managers.
Comments from Fed officials are keeping down U.S. yields, said Jeremy Stretch, head of G10 FX strategy at CIBC. “That’s maintaining the weaker dollar narrative.”
Dovish comments from Fed speakers continued on Tuesday with a speech by Charles Evans, president of the Federal Reserve Bank of Chicago, who said recent inflation reports reflected only a “burst of post-pandemic relative price level adjustments.”
Two other Fed officials made similar statements on Monday.
The British pound, which had run up about 2% against the dollar since April, was stalled at $1.4149 as though it could not break through $1.42.
Sterling needs fresh evidence of British economic strength to get back to the 2021 high of $1.4240 reached in February, traders and analysts said.
Cryptocurrencies Bitcoin and Ether were off about 3% for the day in the afternoon in New York.
Treasury yields fall with the 10-year rate at 1.56%
U.S. Treasury yields fell on Tuesday, with the 10-year Treasury note yield hovering around 1.56%.
The yield on the benchmark 10-year Treasury note fell to 5 basis points 1.557% at around 4:00 p.m. ET. The yield on the 30-year Treasury bond dipped about 5 basis points to 2.253%. Yields move inversely to prices. One basis point equals 0.01%.
Reference: CNBC
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