* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Hideyuki Sano
TOKYO, Feb 17 (Reuters) - The dollar advanced on Wednesday,hitting a four-month high against the yen as U.S. bond yieldsjumped on the prospects of further economic recovery and apossible acceleration in inflation.
Bitcoin held firm, a day after the cryptocurrency hit$50,000 for the first time, bringing its total marketcapitalisation to more than $900 billion, as traders bet on itsfurther acceptance among major companies.
The dollar's index against six other major currencies jumpedback to 90.681, from a three-week low of 90.117 hit on Tuesday.
Boosting the dollar was soaring U.S. bond yields, with the10-year yield rising to 1.331% from around 1.20% atthe end of last week.
"The move up in yields has been driven by increasinginflationary concerns amid a rise in energy prices along withthe prospect of a big U.S. fiscal stimulus and the globalrecovery entering a more solid stage as vaccine roll out lead tothe reopening of economies," said Rodrigo Catril, senior FXstrategist at National Australia Bank in Sydney.
The yen, which is sensitive to U.S. yields, reacted the mostwith the dollar jumping to a four-month high of 106.225 yen. Itlast stood at 106.13 yen.
"I think the dollar's downtrend is over. At the start of theyear, speculators were betting on a fall in the dollar below 100yen. They seem to have abandoned such a view now," said YukioIshizuki, senior strategist at Daiwa Securities.
The euro slipped slightly to $1.2085 though its fallwas less pronounced due to its gains earlier on Tuesdayfollowing strong German economic sentiment data.
The New York Federal Reserve's Empire State manufacturingreport released on Tuesday offered an upbeat economic picture,with a rise in its "prices paid index" stoking fear of fasterinflation.
That optimism was echoed by St. Louis Fed President JamesBullard, who told CNBC that U.S. financial conditions were"generally good," and that inflation was likely to heat up thisyear.
San Francisco Fed President Mary Daly, however, saidpressures on inflation are still downward, pushing againstcritics warning low interest rates and government spending couldoverheat the U.S. economy and spark high inflation.
"Her comments are not resonating with market playerspreoccupied with inflation at this point," said Daiwa'sIshizuki.
The positive mood on the economic outlook is underpinningrisk-sensitive currencies.
The British pound held firm at $1.3863, havingreached its highest level since April 2018 on Tuesday. Againstthe euro, the pound traded at its highest level since early Mayat 87.07 pence per euro.
The Australian dollar stood at $0.7734, downslightly but still not far from Tuesday's one-month high of$0.7805.
The offshore Chinese yuan also stepped back after hitting a2-1/2-year high of 6.4010 per dollar and last stood at 6.4269.
(Reporting by Hideyuki Sano; Editing by Sam Holmes)
https://finance.yahoo.com/news/forex-dollar-hits-4-month-011205262.html
2021-02-17 01:23:07Z
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