New York (Reuters) – The dollar fell Tuesday, lowering its 3-1 / 2 high as U.S. Treasury yields stabilized, allowing for more risky currencies such as the pound, the Australian dollar and Kiwi dollar to earn benefits.
The index that measures the strength of the savings dollar against a basket of other currencies was 0.3% lower, at 92.081, after hitting a 3-1 / 2-month high of 92.506 during hours Asian trade.
US 10-year financial bond yields fell to 1.52% after falling near 13-month highs of 1.613% in the previous session in anticipation of a faster-than-expected economic recovery and inflation potentially, as President Joe Biden ‘s $ 1.9 trillion coronavirus aid package moved forward.
“We have seen yields take some ground back after receiving calm comments from Finance Secretary Janet Yellen reducing the prospect of runoff inflation,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
On Monday, Yellen said Biden’s aid package would fuel the U.S.’s “very strong” economic recovery, and that there are tools to deal with inflation if the economy runs too hot.
Traders are keeping a close eye on yields could rise later this week as the market digs for an auction of $ 120 billion of 3-, 10-, and 30-year Treasury, particularly from after last week’s soft auction and 7-year-old pound sales that saw a spike in yield.
U.S. inflation data is also due Wednesday and Friday.
“Sustainability is likely to remain the topic of the day ahead of UST auctions and the spread of U.S. inflation tomorrow, which are near-term threats to FX markets,” said ING strategist Chris Turner, Francesco Pesole and Petr Krpata in a daily note. .
Commodity-linked currencies benefited from yields, with the Australian dollar gaining 0.71% to $ 0.7703 and the New Zealand dollar gaining 0.27% to $ 0.7747.
The economic outlook has clarified across the globe due to the accelerated spread of COVID-19 vaccines in some countries and also due to the US stimulus package, said the organization for Economic Cooperation and Development, walking his predictions.
The euro rose 0.38% to $ 1.18900 and sterling gained 0.46% to $ 1.3881.
Looking ahead, traders are aiming for a two-day U.S. Federal Reserve meeting next week. There are low expectations that the central bank will announce major policy changes after Chairman Jerome Powell last week expressed concern about a rise in bond yields.
Reporting with John McCrank in New York and Ritvik Carvalho in London; further statement by Hideyuki Sano in Tokyok and Sagarika Jaisinghani in Bengaluru. Edited by Mark Potter, Steve Orlofsky and David Gregorio