TOKYO (Reuters) – The dollar hovered around its three-month high on Monday after the US Senate’s passage of an exceptional stimulus bill sparked another sell-off in the bond market, while currencies of major commodity exporters retreated as a broader risk trade. has lost momentum.
The dollar index stood at 92.073 against a basket of six major currencies, up 0.17% and close to its three-month high of 92.201 set on Friday.
The Senate passed a $ 1.9 trillion COVID-19 relief plan, a day after an astonishing U.S. jobs report sent the greenback to its highest level since November 2020.
“The dollar is in demand because the United States is the world’s most service-intensive economy, and once the reopening speech is in full swing, that will provide the icing on the cake,” said Stephen Innes, strategist Head of Global Markets at Axi.
As investors increased bets on a faster economic rebound this year, concerns over higher inflation pushed bond yields higher despite assurances from central banks, including the U.S. Federal Reserve, that monetary policy will remain flexible.
The yield on benchmark 10-year U.S. Treasuries hovered near a year-long high on Monday, while U.S. Nasdaq futures fell around 1% and stock index futures fell. Europeans reduced earnings as the sale spilled over to other risky assets as well.
Speculators reduced their net short positions on the dollar last week to $ 27.80 billion, which is the smallest short position since December 15 and suggests that the dollar bears are giving up betting against the greenback.
The dollar held close to a one-month high against the British pound, which traded at $ 1.3819, and a three-month high against the euro, which stood at $ 1.1904.
Against the low-yielding yen, the greenback was flat at 108.39 yen, after hitting a nine-month high of 108.645 on Friday.
“A greater return by other central banks to their respective bond markets over the past week than the Fed provided has given a reason for the dollar to widen,” Innes said.
The Chinese yuan hit its lowest level in more than two months, as the rebound in the dollar and US yields prompted many investors to reassess expectations for the yuan, which the market expected to be stronger for the remainder of the year.
The Australian dollar rose 0.2% to $ 0.7696, but was well below its session high of $ 0.77230. The New Zealand dollar fell around 0.1% after rising 0.4% to $ 0.719. Antipodean currencies have been in demand because of their links to global commodity trade.
The US dollar fell 0.38% against the Norwegian krone to 8.5283 and eased slightly to 1.2637 Canadian dollar as traders bought currencies from oil exporters.
Some traders said a surge in Brent futures above $ 70 a barrel for the first time in more than a year sparked a wave of bids in commodity currencies at the start of trading. Asian.
Reporting by Stanley White in Tokyo and Sagarika Jaisinghani in Bangalore; edited by Richard Pullin