Dollar makes a modest comeback, lower US yields hinder gains

US dollar

On Thursday, the dollar was able to steady itself after the slip on the last session, although persisting risk aversion pinned Treasury yields near multi-week lows and hampered the dollar’s rise.

The dollar rose 0.3 percent to 112.265 yen after being near a 10-year low of 111.590 the previous day. It was partly affected by the drop in Treasury yields last night.

The dollar index which measured the dollar against other major currencies went up 0.1 percent to 100.370.

Hoping for a large fiscal spending and other pro-growth policies under U.S. President Donald Trump, the dollar index went up to a 14-year high of 103.820 in January.

According to Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo: “We are now in a phase where downside risks to the dollar has become predominant, with the drop in Treasury yields having gained further momentum this week due to perceived European political risks.”

Treasury yields were stuck near a multiple-week low set on Wednesday.

As expectations of an interest rate hike by the Federal Reserve diminish, buying of U.S. Treasuries gathered steam this week.

The euro dropped 0.1 percent at $1.0678, heading towards a one-week low of $1.0640 achieved on Wednesday on increased European political woes.

The New Zealand Dollar went down 0.8 percent at $0.7201, far from the three-month high of $0.7375 hit earlier this week.

The New Zealand Dollar slipped after the Reserve Bank of New Zealand kept rates at a record low of 1.75 percent on Thursday, as expected, and said that any policy tightening that may occur might be at least two years away.

As collateral damage, the Australian dollar lost 0.4 percent on the day trading at $0.7615.


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