AIRLINK 62.48 Increased By ▲ 2.05 (3.39%)
BOP 5.36 Increased By ▲ 0.01 (0.19%)
CNERGY 4.58 Decreased By ▼ -0.02 (-0.43%)
DFML 15.50 Increased By ▲ 0.66 (4.45%)
DGKC 66.40 Increased By ▲ 1.60 (2.47%)
FCCL 17.59 Increased By ▲ 0.73 (4.33%)
FFBL 27.70 Increased By ▲ 2.95 (11.92%)
FFL 9.27 Increased By ▲ 0.21 (2.32%)
GGL 10.06 Increased By ▲ 0.10 (1%)
HBL 105.70 Increased By ▲ 1.49 (1.43%)
HUBC 122.30 Increased By ▲ 4.78 (4.07%)
HUMNL 6.60 Increased By ▲ 0.06 (0.92%)
KEL 4.50 Decreased By ▼ -0.05 (-1.1%)
KOSM 4.48 Decreased By ▼ -0.09 (-1.97%)
MLCF 36.20 Increased By ▲ 0.79 (2.23%)
OGDC 122.92 Increased By ▲ 0.53 (0.43%)
PAEL 23.00 Increased By ▲ 1.09 (4.97%)
PIAA 29.34 Increased By ▲ 2.05 (7.51%)
PIBTL 5.80 Decreased By ▼ -0.14 (-2.36%)
PPL 107.50 Increased By ▲ 0.13 (0.12%)
PRL 27.25 Increased By ▲ 0.74 (2.79%)
PTC 18.07 Increased By ▲ 1.97 (12.24%)
SEARL 53.00 Decreased By ▼ -0.63 (-1.17%)
SNGP 63.21 Increased By ▲ 2.01 (3.28%)
SSGC 10.80 Increased By ▲ 0.05 (0.47%)
TELE 9.20 Increased By ▲ 0.71 (8.36%)
TPLP 11.44 Increased By ▲ 0.86 (8.13%)
TRG 70.86 Increased By ▲ 0.95 (1.36%)
UNITY 23.62 Increased By ▲ 0.11 (0.47%)
WTL 1.28 No Change ▼ 0.00 (0%)
BR100 6,941 Increased By 63.6 (0.92%)
BR30 22,802 Increased By 233 (1.03%)
KSE100 67,176 Increased By 628.6 (0.94%)
KSE30 22,090 Increased By 175.1 (0.8%)
Markets

Dollar stalls as yield gains slow, focus shifts to ECB

  • The Canadian dollar, which surged to a six-week high on Wednesday, was last quoted at 1.2500 against its US counterpart.
Published April 22, 2021

TOKYO: The dollar was pinned near multi-week lows against most major currencies on Thursday as fading gains in US Treasury yields reduced the greenback's interest rate advantage.

The euro was in focus ahead of a European Central Bank (ECB)meeting later on Thursday, where any positive comments about the economic outlook or hints of tapering bond purchases are expected to send the common currency racing higher.

Sentiment toward the dollar has weakened as last month's spike in Treasury yields reverses course, but some analysts say the outlook over the longer term remains positive due to a strong US economy and an improved coronavirus vaccination programme.

"We've confirmed that demand for Treasuries is healthy, which means there is no upward pressure on yields," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.

"In this environment, the dollar will test the downside against the yen. The euro is different because there are signs that people inside the ECB are more optimistic about the economy, which raises questions about tapering."

The dollar stood at 108.04 yen, close to a seven-week low.

The euro was quoted at $1.2037, not far from its strongest since March 3.

The British pound bought $1.3931.

On Wednesday a closely watched auction of US 20-year Treasuries drew strong demand, which helped the fixed income market regain its composure and put a cap on yields.

Last month, Treasury yields spiked to their highest in more than a year due to worries about rising inflation, which prompted dollar bulls to pile into the currency.

However, this trade has started to unwind this month as yields reversed course, and investors will now look to the US Federal Reserve's meeting next week for new trading cues.

The ECB is not expected to change policy when it meets later on Thursday, but analysts say this meeting will set the stage for June, when policymakers have to decide whether to slow bond buying.

Dutch central banker Klaas Knot has already said tapering is possible, and the euro could resume its rise against the dollar on any signs that a reduction in bond purchases is gaining more support within the ECB, analysts said.

Monetary policy has drawn renewed attention after the Bank of Canada signalled that it could start hiking interest rates in late 2022 after it cut the pace of bond purchases, making it the first Group of Seven central bank to move towards withdrawing extraordinary stimulus.

The Canadian dollar, which surged to a six-week high on Wednesday, was last quoted at 1.2500 against its US counterpart.

The Australian and New Zealand dollars also held onto overnight gains against the greenback, supported by speculation that their central banks are more likely to follow Canada's example due to an improving economic outlook.

Comments

Comments are closed.