FOREX-Dollar dips, Aussie jumps on global growth optimism
* U.S. dollar at three-year lows vs Aussie dollar
* Euro-dollar crosses $1.22
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E (Rewrites throughout, updates prices, new byline, changes dateline, previous LONDON)
By Karen Brettell
NEW YORK, Feb 25 (Reuters) - The dollar index fell to a seven-week low on Thursday, the Australian dollar hit a three-year high and safe havens weakened as global growth optimism sent government debt yields surging worldwide.
Easy financial conditions, the promise of fiscal stimulus and accelerating COVID-19 vaccine rollouts have boosted expectations that growth and inflation will accelerate.
More recently, bond yields after adjusting for inflation have also risen at a faster pace, indicating a growing belief that central banks may begin to pare back their ultra-loose policies, even as central bank officials have maintained their dovish rhetoric.
“It has been a global move, I think that's one part of why the dollar wasn't rallying even with higher yields,” said Vassili Serebriakov, an FX strategist at UBS in New York. “Those higher bond yields are a symptom of expectations of a strong economic rebound after the pandemic.”
The dollar dipped 0.26% against a basket of currencies =USD to 89.797, its lowest since Jan. 8.
Data on Thursday showed that fewer Americans filed new claims for unemployment benefits last week amid falling COVID-19 infections. Reserve Chair Jerome Powell reiterated on Wednesday that the U.S. central bank would not tighten its policy until the economy improves. currencies, including the Australian, New Zealand and Canadian dollars, all hit three-year highs as their bond yields surged.
“The U.S. has actually lagged a lot of these other countries in terms of the yield moves,” said Erik Nelson, a macro strategist at Wells Fargo (NYSE: WFC ) in New York, noting that New Zealand's 10-year Treasury yield gained 18 basis points on Thursday. NZ10YT=RR
That is "pretty stunning," he said. “The commodity space has obviously been very hot recently.”
The Aussie AUD=D3 got as high as $0.80007 against the greenback while the kiwi NZD=D3 reached $0.7463.
The Canadian dollar CAD=D3 got as far as 1.2468 loonies per U.S. dollar.
The euro also gained to a three-week high, despite its bond yield increases lagging other countries. It was last up 0.44% at $1.2224. EUR=EBS
The safe-haven Japanese yen, which tends to underperform when global growth improves, weakened as far as 106.20 yen per dollar. JPY=D3
“Some of the currencies that typically don't do well in a global rebound are lagging,” Serebriakov said. “There is some differentiation (in dollar weakness), it's not just across the board the way it was last year when everything was driven by U.S. real yields falling and selling dollars across the board.”
Bitcoin was last up 2.67% on the day at $51,080, having recovered some of its losses from the start of the week BTC=BTSP .
Currency bid prices at 10:15AM (1515 GMT) Description
U.S. Close Pct Change
+106.1900 +105.8800 Euro/Yen
+129.8900 +128.7900 Dollar/Swiss
+0.9038 Sterling/Dollar GBP=D3
+$1.4124 Dollar/Canadian CAD=D3
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.
Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb
Drop an image here or