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FOREX-Dollar slumps to 8-week low on bets U.S. tapering remains distant

Published 04/26/2021, 02:08 PM
Updated 04/26/2021, 02:10 PM
USD/TRY
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* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
* Focus is on Fed meeting ending Wednesday
* Treasury yields and dollar likely to fall on Fed stance
* Euro bid on improving economic data
* Turkish lira at risk of testing all-time low

By Stanley White
TOKYO, April 26 (Reuters) - The dollar slumped to an almost
eight-week low versus major peers on Monday amid speculation
that U.S. Federal Reserve Chairman Jerome Powell will shun talk
of tapering bond purchases at a policy meeting this week.
The euro rose to a two-month high against the greenback
before data later on Monday forecast to show an improvement in
German business sentiment, which would bolster hopes for a
brighter economic outlook.
Powell is likely to face questions over whether an improving
labour market and rising coronavirus vaccinations warrant a
withdrawal of monetary easing, but most analysts expect him to
say such talk is premature, which would put downward pressure on
Treasury yields and the dollar.
"The dollar is likely to continue to trend lower in line
with the gathering momentum in the world economy," analysts at
Commonwealth Bank of Australia wrote in a research note.
"We expect the Fed policy meeting to be a non-event for the
dollar. The U.S. economy is a long way from meeting the
'substantial further progress' threshold for the Fed to taper
its asset purchases."
The dollar stood at 107.71 yen JPY=EBS , close to its
lowest since March 4.
The euro EUR=D3 rose as high as $1.2117, adding to gains
made on Friday after positive data on European services and
manufacturing activity. A survey from Germany's Ifo institute due later on Monday is
expected to show business conditions continued to improve in
Europe's largest economy.
The British pound GBP=D3 was quoted 0.2% higher at
$1.3902, adding to a 0.3% gain in the previous session.
The dollar was little changed at 0.91225 Swiss franc
CHF=EBS , close to a two-month low.
The Fed's next meeting ends on Wednesday, and while no major
policy changes are expected, investors will pay close attention
to Powell's comments after the meeting.
Rising coronavirus vaccination rates and an improving
economic outlook are reasons to be optimistic, but many traders
and analysts say Powell is likely to reiterate his commitment to
keep easy policy in place for an extended period.
"He recently said that the Fed is unlikely to start lifting
rates before 2022," Royal Bank of Canada strategist Alvin Tan
wrote in a client note.
"While we think that view will be challenged over the coming
year, (he) is likely to continue reiterating it this week."
U.S. funds have been selling the dollar against the yen
recently in Asian trading, which is an additional sign that
major investors expect lower U.S. Treasury yields to push the
dollar lower, some traders in Tokyo said.
In emerging markets, traders are watching the Turkish lira
TRYTOM=D3 to see if it will test its all-time low of 8.58 per
dollar due to worsening relations with the United States and
worries about a dovish central bank governor. The lira was last
quoted at 8.4225.
The onshore yuan CNY=CFXS edged up to 6.4889 per dollar,
just shy of a six-week high.
Elsewhere, the Australian AUD=D3 and New Zealand dollars
NZD=D3 rose toward one-month highs but are likely to track
moves in global commodity prices, traders said.
In the cryptocurrency market, Bitcoin BTC=BTSP reclaimed
the $50,000 mark, last trading 6.7% higher at $52,417, and
smaller rival Ether ETH=BTSP rose 6% to $2,460, recouping some
of their losses from last week triggered by U.S. President Joe
Biden's plan to raise capital gains taxes for wealthy investors.
Currency bid prices at 553 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2110 $1.2097 +0.11% -0.88% +1.2117 +1.2089
Dollar/Yen JPY=EBS 107.6820 107.8800 -0.19% +4.24% +107.9270 +107.6700
Euro/Yen S>
Dollar/Swiss CHF=EBS 0.9125 0.9137 -0.11% +3.15% +0.9140 +0.9122
Sterling/Dollar GBP=D3 1.3902 1.3881 +0.16% +1.76% +1.3906 +1.3872
Dollar/Canadian CAD=D3 1.2460 1.2475 -0.11% -2.14% +1.2489 +1.2450
Aussie/Dollar AUD=D3 0.7772 0.7746 +0.36% +1.06% +0.7780 +0.7735
NZ NZD=D3 0.7212 0.7195 +0.25% +0.45% +0.7220 +0.7191
Dollar/Dollar


All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX

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World FX rates https://tmsnrt.rs/2RBWI5E
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