FOREX-Dollar slide continues, yuan rally gets attention - Reuters

 (Updates prices, revises throughout, previous dateline NEW
YORK/LONDON)
    * Dollar index back below 90; euro above $1.22
    * Chinese yuan gains to 6.40 to dollar, state banks
intervene
    * Sterling's climb stalls below $1.42
    * Interest rate trajectories drawing attention
    * Graphic: World FX rates tmsnrt.rs/2RBWI5E

    By David Henry
    NEW YORK, May 25 (Reuters) - The dollar extended its nearly
two-month slide against major peers on Tuesday as U.S. interest
rates fell on U.S. Federal Reserve arguments for easy monetary
policy despite current inflationary forces.
    The dollar weakness came as U.S. Treasury yields fell to
fresh multi-week lows and the yield curve flattened after an
auction of two-year notes attracted solid demand.
    Benchmark 10-year Treasuries fell as low as
1.56% on Tuesday afternoon.
    Interest rates in many other countries have climbed in the
past month and made their currencies more competitive against
the dollar, said Marc Chandler, chief market strategist at
Bannockburn Global Forex in New York.
    The current outlook is for that difference to continue, he
added. "The Federal Reserve seems to be behind several other
central banks in adjusting and recalibrating monetary policy."
    Since the end of March the dollar has declined on the belief
that low U.S. rates will drive cash abroad to capture gains now
that other economies are beginning to recover more quickly from
the pandemic. 
    The dollar index against major currencies was off
0.2% in the afternoon in New York at 89.646. Early in the day it
fell to 89.533, the lowest since Jan. 7. 
    The euro climbed to January levels and was last up
0.3% on the day at $1.2253.
    Early in the day, China state-owned banks were seen trying
to curb a yuan rally which carried the onshore yuan
to 6.4016 per dollar, the strongest since 2018.
    China's major state-owned banks, four sources said, were
seen buying U.S. dollars at around 6.4 yuan in the Asian
afternoon in a move viewed as an effort to cool a yuan rally led
by its offshore counterpart.
    Strategists have said the dollar is likely be weak against
many currencies until markets see stronger U.S. economic data
and interest rates. Stronger data could come on Friday with new
readings on U.S. core consumer prices in April and a survey of
purchasing managers.
    Comments from Fed officials are keeping down U.S. yields,
said Jeremy Stretch, head of G10 FX strategy at CIBC. "That's
maintaining the weaker dollar narrative." 
    Dovish comments from Fed speakers continued on Tuesday with
a speech by Charles Evans, president of the Federal Reserve Bank
of Chicago, who said recent inflation reports reflected only a
"burst of post-pandemic relative price level adjustments."

    Two other Fed officials made similar statements on Monday.

    The British pound, which had run up about 2%
against the dollar since April, was stalled at $1.4149 as though
it could not break through $1.42.
    Sterling needs fresh evidence of British economic strength
to get back to the 2021 high of $1.4240 reached in February,
traders and analysts said.
    Cryptocurrencies Bitcoin and Ether
were off about 3% for the day in the afternoon in New York.
    ========================================================
    Currency bid prices at 3:08PM (1908 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index                 89.6460        89.8550     -0.23%         -0.372%       +89.8670    +89.5330
 Euro/Dollar                  $1.2253        $1.2217     +0.30%         +0.29%        +$1.2266    +$1.2213
 Dollar/Yen                   108.7000       108.7650    -0.06%         +5.21%        +109.0600   +108.5650
 Euro/Yen                     133.18         132.85      +0.25%         +4.93%        +133.6000   +132.8400
 Dollar/Swiss                 0.8951         0.8967      -0.18%         +1.18%        +0.8974     +0.8931
 Sterling/Dollar              $1.4149        $1.4155     -0.04%         +3.56%        +$1.4211    +$1.4116
 Dollar/Canadian              1.2064         1.2047      +0.15%         -5.26%        +1.2078     +1.2030
 Aussie/Dollar                $0.7751        $0.7754     -0.04%         +0.75%        +$0.7776    +$0.7733
 Euro/Swiss                   1.0968         1.0956      +0.11%         +1.49%        +1.0984     +1.0949
 Euro/Sterling                0.8659         0.8626      +0.38%         -3.11%        +0.8671     +0.8620
 NZ                           $0.7228        $0.7216     +0.24%         +0.72%        +$0.7250    +$0.7209
 Dollar/Dollar                                                                                    
 Dollar/Norway                8.3145         8.3290      -0.27%         -3.27%        +8.3490     +8.2910
 Euro/Norway                  10.1889        10.1790     +0.10%         -2.66%        +10.2285    +10.1555
 Dollar/Sweden                8.2560         8.3119      -0.39%         +0.73%        +8.3197     +8.2503
 Euro/Sweden                  10.1169        10.1564     -0.39%         +0.40%        +10.1647    +10.1119
        

    
 (Reporting by David Henry in New York and Ritvik Carvalho in
London
Editing by Alistair Bell and Richard Chang)
  

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https://www.reuters.com/article/global-forex/forex-dollar-slide-continues-yuan-rally-gets-attention-idUSL2N2NC26R

2021-05-25 19:42:00Z
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