NEW YORK (Reuters) – The dollar fell Tuesday as more risky currencies against the Australian dollar gained as U.S. stocks stabilized, reflecting an improvement in risk appetite.
The greenback benefited from recent volatility in stocks, which rolled out last week with a dramatic jump in U.S. government debt yields.
Treasures have settled this week, with benchmark yields holding lower than last week’s highs, helping to bring back some market calm.
On Tuesday, “Wall Street maintained a largely sharp Monday gain,” which helped the U.S. currency “lower through the NY session,” Ronald Simpson, managing director, global currency analysis at Action Economics, said in a report.
The dollar index fell 0.31% to 90.731, after reaching a three-week high of 91.396 earlier.
The euro gained 0.36% to $ 1.2092.
Outcome came when participants were concerned that economic recovery from the effects of the COVID-19 pandemic, coupled with fiscal stimulus, will cause a jump in inflation and potentially accelerating tensions from the Reserve Federal.
The volatility also added to the greenback as investors found short positions in the frontier currency.
“If you see variability, the natural tendency is to take risks off the table; in this case it just means getting out of the jobs, and the dollar cuts are very high at this stage ”said Bipan Rai, head of strategy North American FX at CIBC Capital Markets in Toronto.
U.S. dollar short positions were $ 29.33 billion in the week ended Feb. 23, according to data from the Futures Trading Commission.
More risky currencies as the Australian dollar continued to bounce back from last week’s sell-off, with the Aussie also winning after the Australian Reserve Bank reassembled to keep interest rates at levels historical.
The currency last rose 0.77% at $ 0.7831, although it is still below the three-year high of $ 0.8007 reached on Thursday.
Karen Jones, a technical analyst at Commerzbank, said the Aussie and other risky currencies including the Norwegian krone appeared to be returning from interim peaks, which are likely to be optimistic for the near U.S. dollar. term.
The “U.S. dollar bear move is over” for now, Jones said in a report.
The greenback finally fell 1.09% at 8.466 krone, but remains above the 8.313 krone per dollar level reached last week, the weakest for the dollar in more than two years.
Safe-haven currencies including the Swiss franc and Japanese yen, at the same time, came to a slightly stronger end, reversing an earlier weakness.
The Swiss franc struck earlier since November 2020 against the dollar at 0.9193 while the weakest yen since August was at 106.95.
Bitcoin fell to a low session after Gary Gensler, President-designate Joe Biden’s chairman of the U.S. Securities and Exchange Commission, said cryptocurrency has raised new concerns about investor protection.
It was last down 4.11% at $ 47,609.
Citi said in a report that the popular cryptocurrency was at a “tipping point” and could be its preferred currency for international trade or to withstand a “speculative explosion.”
Further statement by Elizabeth Howcroft in London; Edited by Bernadette Baum and Jonathan Oatis