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Dollar Dips To Weekly Low As Stocks Hit All-Time High

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NEW YORK (Reuters) – The dollar fell to a one-week low against a basket of currencies on Monday as stocks hit record highs and Treasury yields held below recent highs, although Analysts said the low liquidity with many parts of the world for the Easter holidays was likely exaggerating the move.

FILE PHOTO: The US dollar bills are seen in front of the stock chart displayed in this illustration taken February 8, 2021. REUTERS / Dado Ruvic / Illustration / File Photo

The dollar has rebounded this year alongside rising U.S. Treasury yields, with investors betting on faster U.S. economic growth and higher inflation as the economy reopens after business closures linked to COVID-19.

But the decline in dollars on Monday, even after strong employment data on Friday, may indicate that much of the bullish outlook is on, at least in the near term.

Failure to test new highs (of yields) right after nonfarm wages on Friday suggests that perhaps some of that US economic optimism is already being taken into account, said Vassili Serebriakov, FX strategist at UBS in New York. .

That said, you have to be a little careful in interpreting these movements as much of the world is still closed for the holidays.

The greenback rallied on Friday after data showed the U.S. economy created the most jobs in seven months in March, as more Americans were vaccinated and the government distributed additional funds for pandemic relief, marking the start of what could be the strongest economic performance this year. in nearly four decades.

The dollar fell 0.40% against a basket of currencies on Monday to 92.59. It fell to 93.44 on Wednesday, which was the highest since November 5.

The euro gained 0.50% to $ 1.1811. The British pound rose 0.57% to 1.3903. The Australian dollar, which typically rises when risk appetite is strong, gained 0.78% to $ 0.7653.

Data on Monday showed that a measure of US service sector activity hit a record high in March amid strong growth in new orders.

The greenback has generally risen as stocks have gained over the past few months. Investors are now watching if this relationship continues, as it may indicate a shift in how the currency is responding to improving risk appetite.

The trickiest thing for markets right now is figuring out how sensitive the dollar is to good US economic news, said Erik Nelson, macro strategist at Wells Fargo in New York.

That’s a huge question, because if we get into a phase where the dollar is no longer a safe haven and no longer a currency risk, that’s a big regime change, Nelson said.

Investors are also focusing on the infrastructure plan proposed by US President Joe Bidens, which would involve higher corporate taxes to pay for new spending.

Biden would be ready to move his $ 2 trillion infrastructure plan forward without the backing of Republican lawmakers if he couldn’t reach a bipartisan deal, Energy Secretary Jennifer Granholm said on Sunday.

U.S. Treasury Secretary Janet Yellen said on Monday she was working with G20 countries to agree on a minimum global corporate tax rate to end a 30-year race to lower corporate rates. corporate taxation.

The cryptocurrency’s market cap hit an all-time high of $ 2 trillion on Monday, according to data and market followers CoinGecko and Blockfolio, as gains in recent months have attracted demand from institutional investors and investors alike. detail.

Bitcoin was last up 1.16% on the day at $ 58,888.

Edited by David Gregorio

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