TOKYO (Reuters) – The U.S. dollar fell a six-month high against the yen and extended a reversal from a three-year low to the Aussie on Thursday, fueled by a sharp rise in U.S. bond yields overnight.
Government bonds, and in particular the U.S. Treasury, have become at the heart of markets around the world, after traders moved aggressively to price in monetary tensions earlier than the Federal Reserve and his peers emerge.
Asian stocks expanded global equities sales, with risk appetite emerging as the rise in yields hit inflation. Emerging currencies and commodity-related currencies continued to pull back Thursday, while cryptocurrencies stabilized after falling overnight.
“The market is increasingly confident about how strong the global economy may look in the second half of the year, which means that it is becoming increasingly doubtful that it will. Central Banks are able to honor the promises that rates are not going anywhere, ”said Ray Attrill, head of forex strategy at the National Bank of Australia in Sydney.
“The decline in bonds stimulated equities,” leading to “classic safe support of the U.S. dollar,” he said.
The dollar index rose to 90.38, continuing to rise 0.2% from Thursday, when it recovered from a loss of as much as 0.26% before the bond offer. That brings it down less than 0.2% for the month, after a 0.6% gain in January.
The greenback did not change much at 106.165 yen after touching 106.43 earlier for the first time since September. It has strengthened 2.8% this year after the first monthly hikes back since mid-2018, placing the yen among the worst performing currencies in 2021.
Both the dollar and the yen are traditional currencies on port, but the yen tends to decline as U.S. output rises, but the dollar tends to strengthen.
Bond yields have soared this year with the prospect of a major fiscal stimulus amid continued easing monetary policy, led by the United States.
Acceleration in the pace of vaccination across the globe has also strengthened a trade known as trade reflation, citing a bet on an increase in economic activity and prices.
In recent days, rising inflation-linked bond yields have accelerated, reflecting a growing belief that central banks may have to reverse ultra-diffusion policies, which despite their dovish astronomy.
“The fixed-income approach is moving into a more lethal level for risky assets,” after being described as “a story of improving growth prospects,” strategists wrote Westpac in a messenger note.
“Bond markets seem to be taking a global view of central bankers, and are smartly standing up to the current trend. ”
The 10-year Finance benchmark yield exceeded 1.6% overnight for the first time in a year, after meeting a $ 62 billion auction of 7-year pounds with weak demand.
The Australian dollar continued to pull back after going to $ 0.80 on Thursday for the first time since February of 2018, declining 0.6% to 0.78195.
New Zealand’s currency fell 0.4% to $ 0.7336 after reaching $ 0.7463 on Thursday, a level not seen since August 2017.
The Canadian dollar weakened 0.1% to C $ 1.2620 after falling from its own three-year high to the green back at C $ 1.2468 overnight.
The euro slipped 0.2% to $ 1.21475 after touching a seven-week high of $ 1.22435 on Thursday.
Cryptocurrencies remained lower after falling overnight. Bitcoin changed hands at $ 46,443 after the 5% slide on Thursday, while ether traded at $ 1,473 after a 9% fall.
Reciting with Kevin Buckland; Edited by Stephen Coates