The dollar hit a two-week high on Tuesday as risk appetite ebbed amid a sell-off in stocks and Treasury Secretary Janet Yellen said interest rates might need to be raised to prevent the American economy from overheating and also supported the dollar.
Yellen, in a speech prepared on Tuesday, made a comment as President Joe Biden’s new economic investment programs come into play. She said the additional costs were small compared to the relative size of the economy. read more
The dollar’s appeal as a safe haven was further enhanced as the Nasdaq fell more than 2% (.IXIC), the S&P fell more than 1% (.SPX), and the Dow Jones Industrial Average fell 0.3% less steep (. DJI), and also as Treasury yields declined. [US/]
Analysts believe that most of the good news on the economy has probably been heeded by the market.
“After a dramatic improvement during the first quarter, US economic expectations are in line with reality, which means that surprises are no longer shifting towards positive results,” said Carl Chamotte, chief market strategist at Cambridge Global Payments in Toronto.
“For many momentum investors and traders, some rebalancing away from risk-sensitive currencies towards safe haven makes a lot of sense at this stage,” he added.
Tuesday’s rebound reversed Monday’s losses following a disappointing US manufacturing report, sending the dollar 1% above its monthly low reached last week.
The Dollar Index, which measures the dollar’s value against a basket of other major currencies, rose 0.3% to 91.278. In April, it fell by more than 2%.
“There is currently no consensus on what will happen to the dollar in the remainder of the year, as it was at the beginning,” says a recent study by Tempus Inc.
“While some traders believe that the US dollar may rise due to future bond yields rising as inflationary expectations rise, others believe the dollar is currently overvalued and will only decline as the rest of the world plays successfully. catch-up. “
The US dollar was up 0.8% against the Australian dollar to $ 0.7704 and 0.9% against the New Zealand dollar to $ 0.7138, although commodity prices were generally more resilient.
The euro fell 0.4% against the dollar to $ 1.2013. Against the yen, the dollar rose 0.2% to yen 109.32.
Sterling fell 0.1% to $ 1.3881 ahead of a meeting of the Bank of England on Thursday, which could announce a slowdown in its bond buying program as the vaccine rolls out to bolster the UK economy.
In the cryptocurrency sector, Ethereum hit another all-time high of $ 3,530 on Tuesday amid growing institutional interest. Last time it fell 1.7% to $ 3,370.
Dogecoin, created as a joke for early adopters of the cryptocurrency, hit an all-time high of $ 0.5922. It last rose 36% to $ 0.5549, according to CoinGecko.com.
Currency purchase prices at 15:35 (1935 GMT)
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