Reuters | Feb 24, 2021 02:48
* Increase in risk appetite hurts dollar
* Kiwi dips but then erases losses after RBNZ decision
* Powell emphasises low rates here to stay
By Stanley White
TOKYO, Feb 24 (Reuters) - The dollar slipped to a three-year
low against the British pound and fell against commodities
currencies on Wednesday as investors increased bets that a
global economic recovery will boost riskier assets.
The New Zealand dollar briefly fell but then quickly
stabilised after the country's central bank kept monetary policy
on hold and said inflation and employment will remain below its
targets in the medium term.
U.S. Federal Reserve Chair Jerome Powell reiterated on
Tuesday that interest rates will remain low and the Fed will
keep buying bonds to support the U.S. economy, which many
traders say is a long-term negative factor for the dollar.
At the same time, more money is flowing toward currencies
that are expected to benefit from a pick-up in global trade and
to countries that are bouncing back quickly from the coronavirus
pandemic, which is also weighing on the dollar.
"Signs of economic recovery are lifting commodities prices,
which in turn supports currencies of commodities exporters,"
said Junichi Ishikawa, foreign exchange strategist at IG
"Risk appetite has improved a lot, and this leaves the
dollar at a big disadvantage."
The British pound GBP=D3 rose to $1.4170, the highest
since April 2018.
The outlook for sterling has brightened as investors cheer
Britain's rapid coronavirus vaccination programme and its plans
to ease lockdown restrictions on economic activity.
The New Zealand dollar NZD=D3 edged up to $0.7367, close
to a three-year high.
The Reserve Bank of New Zealand expressed some caution about
the outlook, which may have disappointed some traders who
expected central bankers to acknowledge a recent improvement in
The Australian dollar AUD=D3 , which tends to benefits from
rising metal and energy prices, jumped to a three-year high of
Against the euro EUR=D3 , the dollar traded at $1.2158,
close to a six-week low.
The dollar managed to rise to 105.40 Japanese yen JPY=D3
and hit an almost three-month high against the Swiss franc
CHF=D3 , but overall sentiment was still negative on the
Powell pushed back against suggestions that loose monetary
policy will lead to runaway inflation and financial bubbles,
which have emerged as two important themes this year, because
there is growing scepticism about the rapid pace of gains in
global stocks. For economies that have limited disruptions caused by the
coronavirus outbreak, their central bankers now face questions
of when to start tightening policy, which makes the dollar look
less attractive, some analysts say.
The dollar index =USD against a basket of six major
currencies fell to 90.025.
In the cryptocurrency market, bitcoin BTH=BTSP halted its
plunge from a record high above $50,000 and stabilised at
$49,052. Square Inc SQ.N has invested $170 million in the
digital asset, but some analysts still argue that bitcoin's
recent surge was excessive. Rival digital currency ether ETH=BTSP recovered from a
sharp sell-off to trade up slightly at $1,591.
Currency bid prices at 0129 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Euro/Dollar EUR=EBS $1.2158 $1.2150 +0.07% -0.49% +1.2164 +1.2143
Dollar/Yen JPY=D3 105.4000 105.2600 +0.21% +2.13% +105.4800 +105.2400
Euro/Yen EURJPY= 128.15 127.86 +0.23% +0.97% +128.2300 +127.7800
Dollar/Swiss CHF=EBS 0.9058 0.9054 +0.06% +2.40% +0.9064 +0.9048
Sterling/Dollar GBP=D3 1.4190 1.4112 +0.55% +3.86% +1.4235 +1.4111
Dollar/Canadian CAD=D3 1.2569 1.2590 -0.16% -1.29% +1.2596 +1.2560
Aussie/Dollar AUD=D3 0.7938 0.7909 +0.37% +3.19% +0.7945 +0.7903
NZ NZD=D3 0.7367 0.7343 +0.33% +2.59% +0.7377 +0.7317
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Tokyo Forex market info from BOJ TKYFX
World FX rates https://tmsnrt.rs/2RBWI5E
Written By: Reuters
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