Dollar in doldrums as recovery optimism thrives

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3 min readFeb 16, 2021

Dollar in doldrums as recovery optimism thrives

SINGAPORE (Reuters) Telegram FX Signals — The U.S. dollar fell to a three-week low on Tuesday, sterling hit an almost three-year high and commodity currencies rose as vaccination progress added to investors’ recovery hopes.

The buoyant mood, and a sell-off in U.S. Treasuries, also dragged on the safe-haven Japanese yen, which fell through its 200-day moving average against the dollar and struck multi-year lows against the euro, Aussie and Swiss franc.

Telegram FX Signals

The yen last traded 0.2% weaker at 105.53 per dollar. The dollar index, which measures the greenback against a basket of majors, fell 0.1% to 90.240, its lowest since Jan. 27 and the euro hit its highest since that date.

The dollar traded near milestone lows against other currencies.

The risk-sensitive Australian dollar hit a one-month high of $0.7802 and the kiwi made a five-week peak of $0.7257.

“Things right now reflect greater comfort with the story of a synchronised global recovery, which is why we are seeing a weaker dollar,” he said.

Sterling, which has led the charge, extended gains to hit $1.3946, its highest level since April 2018 as Britain leads the world in per-capita vaccination speed. The currency has gained almost 3% from early-February lows. [GBP/] Forex Signals — The U.S. dollar was down

The euro crept 0.2% higher to $1.2150 to re-test recent resistance at that level. Rising oil prices lifted the Canadian dollar and Norwegian crown to multi-week highs. [O/R]

YIELDS AND YEN

Besides the dollar, the Japanese yen has been the other casualty of the broad rally in financial markets and it hit a one-week low on Tuesday. Forex Signals — US Dollar Up After COVID-19 Recovery

Recent equity gains — global stocks have climbed for a dozen days straight — have been matched by growing expectations for higher inflation, especially as central banks keep promising to keep rates low for a long time. [MKTS/GLOB]

SIGNALS FX

“The yen has been the worst performing currency of 2021, with its negative correlation to U.S. Treasury yields proving to be the biggest dampening factor,” said Francesco Pesole, currency strategist at Dutch bank ING in a note to clients.

Forex — Yen Begins to Feel Coronavirus Heat

“When adding weak safe-haven demand as the global recovery gathers pace, some additional trimming of yen net long positions may be on the cards.” FX Signals — Dollar climbs against yen

Ahead on Tuesday, investors are looking to euro zone growth estimates, a German sentiment survey and U.S. manufacturing data to gauge the relative pace of the world’s pandemic recovery.

Dollar Down COVID-19 Recovery

Dollar Weakens; Economic Recovery Optimism Grows