Dollar trades near two-week low as U.S. yields fall
The U.S. dollar traded near its lowest in more than two weeks versus major peers on Thursday, tracking Treasury yields lower, after minutes of the Federal Reserve's March policy meeting offered no new catalysts to dictate market direction.
Fed officials remained cautious about the risks of the pandemic - even as the U.S. recovery gathered steam amid massive stimulus - and committed to pouring on monetary policy support until a rebound was more secure, the minutes showed Wednesday.
Fed Chair St. Jerome Powell can speak at a virtual International money conference in a while weekday. The dollar index that measures the U.S. currency against a basket of six currencies, edged lower to ninety two.30 in London commercialism, when dipping as low as ninety two.134 on Wednesday for the primary time since March twenty three. The index rallied to Associate in Nursing virtually five-month high of ninety three.439 at the tip of last month because the U.S. pandemic recovery outpaced that of most different developed nations, notably in Europe. "The Fed minutes delivered no negative surprise for risk sentiment, with the committee reiterating no have to be compelled to rush into modification of financial conditions and additional support the recovery," same Petr Krpata, chief EMEA FX and interest rates planner at ING. "We expect the terribly accommodative Fed to eventually weigh down USD as we tend to move in the summer - rising inflation, however no signs of close rate hikes can push front-end U.S. real rates additional into the deep negative, and matched with the sick world economy (which ought to be of a additional synchronous nature in 2H21), ought to weigh down USD." The benchmark one0-year Treasury yield was around 1.658% on weekday, when dipping below one.63% long. It hit 1.776% late last month, its highest in additional than a year. The S&P five hundred eked out a modest gain on Wednesday, moving chiefly sideways since billowing to a record high to begin the week. The chief currency planner at Citigroup (NYSE:C) world Markets Japan, Osamu Takashima, same that the market's direction is tough to decision, however expects subsequent move for the dollar to be lower. "Current market sentiment is delicate risk-on, and below such circumstances the dollar can weaken bit by bit - however no huge moves," he said. The retreat in U.S. yields has additionally removed a driver for dollar gains, he added. The dollar weakened to 109.49 yen , consolidating when withdrawing from one hundred ten.97, its highest in additional than a year, reached on March thirty one. The monetary unit was virtually unchanged from Wednesday at $1.1876, when rebounding from $1.1704, its lowest in virtually 5 months, touched on March thirty one. "The vaccination progress within the Eurozone is considerably insulant that of the U.S., and coronavirus infection rates within the Eurozone area unit on the increase once more," Commonwealth Bank of Australia planner Joseph Capurso wrote in an exceedingly consumer note. "As such, EUR/USD is prone to a move lower towards one.1700 within the near‑term."