LONDON (Reuters) – The U.S. dollar rose Wednesday, reversing some of its overnight losses, as U.S. output found a floor after falling from one-year highs.
Riskier currencies including Australian and New Zealand dollars escaped after recording record gains on Tuesday. Bitcoin turned lower after peaking at $ 55,000 for the first time since February 22nd.
The euro was 0.05% lower at $ 1.18940 after kicking off a 3-1 / 2-month low of $ 1.18355 on Tuesday.
Against the yen, another traditional safe currency, the greenback traded 0.2% higher at 108.68 yen, after rebounding from a nine – month high of 109.235.
Investors will be expecting U.S. inflation numbers to come later today.
Traders are also wary that yields could rise later this week as the market has to dig up $ 120 billion of 3-, 10-, and 30-year-old finances, especially after the UK’s soft auction. last week and sold a 7-year note that saw a spike in yield.
“Especially the last ones (the 10y auction today will be followed by the 30y UST auction tomorrow) the main threat to market sentiment today if low demand calls for pressure on the fragile UST market the relentless decline in UST output is a key feature (behind the risk rally yesterday), ”ING strategists said in a daily note.
“Likewise, it could very well be a reiteration of the friendly sentiment in FX markets seen yesterday. So he should be ready for a day of volatility with the FX market looking for signs of confirmation as to whether yesterday’s risky rally was a short-term blip or a moving start. ”
The dollar index has closely monitored an increase in Treasury yield in the last few weeks, both due to higher yields increasing the appeal of the currency and as the bond bond shakes investor confidence, spewing demand for the safest funds.
Finance’s 10-year benchmark yield settled around 1.5490% Wednesday in European trade after a three-day fall from a year-high of 1.6250%.
The dollar index strengthened around 0.2% to 92.147 in Asia on Wednesday, after falling abruptly from a 3-1 / 2-month high of 92.506 overnight. It was last 0.1% higher at 92.027 in European trade.
Bond investors have been betting that a faster-than-expected economic recession would lead to a rise in inflation, with President Joe Biden expected to sign a $ 1.9 trillion coronavirus aid package as soon as possible to this week.
Many analysts still expect the dollar to weaken over this year, but the recent pace of gains has led some to change their views.
Westpac, which last week talked about selling the dollar index to 91, is now seeing it reach as high as 94.50 before starting again at the recession of the year. Last year as the rest of the world closes the gap with the US economic recovery.
“Global recovery is alive and well, and Europe will get its vaccine together at some point,” Westpac strategists wrote in a note.
“By continuing the global recovery … commodity currencies should perform better.”
The Aussie fell 0.2% to $ 0.7700 after a 1% jump overnight, as a major banker gained market chat about early rate hikes, helping to pull local yields lower. [AUD/]
New Zealand kiwi slipped 0.2% to $ 0.7156 after a 0.8% rise on Tuesday.
In cryptocurrencies, bitcoin rose as high as $ 55,855 on Wednesday before returning to $ 54,729. It hit a record high of $ 58,354.14 on February 21st.
Reciting with Ritvik Carvalho; additional statement by Kevin Buckland in Tokyo and Sagarika Jaisinghani in Bengaluru