LONDON, April 20 — The dollar dropped to its lowest in nearly seven weeks during the Asian session, while the euro rallied, as investors grew more optimistic about the pace of vaccine rollout in Europe and US Treasury yields remained below their March spikes.
The dollar has fallen so far in April as US bond yields retreated from the 14-month highs touched last month. The moves are a reverse of what happened in the first quarter of the year, when the dollar strengthened as US Treasury yields rose, offering higher returns on the greenback.
At 0728 GMT, the dollar index was down 0.1 per cent at 90.952, having hit a low of 90.877 during the Asian session.
The euro was up 0.3 per cent at US$1.2065 (RM4.97) — its highest in nearly seven weeks — after having passed the key US$1.20 in the previous session.
Commerzbank strategist You-Na Park-Heger wrote in a note to clients that the recent fall in the dollar is due to the US Federal Reserve’s reassuring the market that it will not end its monetary stimulus anytime soon, while an improving vaccine situation in Europe is supporting the euro. But she said that the situation could rapidly change.
“The economic recovery in the US might drive up inflation expectations further, fuelling rate hike speculation. The news situation in the euro zone in connection with corona might change again as uncertainty remains high,” she said.
Some analysts said the support for the euro likely came from the announcement that the European Union has secured an additional 100 million doses of Covid-19 vaccine by BioNTech and Pfizer.
Versus the yen, the dollar broke the 108 level overnight, before reversing course, up 0.3 per cent on the day at 108.450.
“USD/JPY is one G10 currency pair which has still not fully retraced the move higher from March when it started the month trading closer to the 106.00-level,” Lee Hardman, currency analyst at MUFG, said in a note to clients.
The Australian dollar strengthened to a one-month high of 0.7812, helped by minutes from the Reserve Bank of Australia’s April meeting which showed the central bank expects a faster rebound from the pandemic.
At 0729 GMT it was at 0.7808, up 0.7 per cent on the day. The New Zealand dollar was up 0.6 per cent at 0.7223.
Oil prices edged higher on Monday, supported by a weaker US dollar but gains were capped by concerns about the impact on demand from rising coronavirus cases in India.
The commodity-linked Norwegian crown hit its strongest since 2018 versus the dollar, and also reached its strongest since January 2020 versus the euro.
Bitcoin was down 3.5 per cent, trading at around US$53,700.
It sank as low as US$51,541.16 on Sunday, after hitting a record high of US$64,895.22 just days earlier. — Reuters
