Dollar ascendant as Powell sticks to script; risk currencies slide

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Dollar ascendant as Powell sticks to script; risk currencies slide

TOKYO — The dollar hit multi-month highs

against the euro and the yen on Friday after Federal Reserve

Chair Jerome Powell did not express concern about a recent

sell-off in bonds while sticking to his stance to keep interest

rates low for a long time.

While Powell did stick with dovish rhetoric overall, he said

the sell-off in Treasuries was not “disorderly” or likely to

push long-term rates so high the Fed might have to intervene

more forcefully, reigniting a sell-off in Treasuries.

He also reiterated a commitment to maintain ultra-easy

monetary policy until the economy is “very far along the road to

recovery.”

“Markets are listening to the central banks and if they are

going to be on hold for a long time, that means long-term

inflation is going to be higher and that’s why you’re seeing the

bond and equity markets sell off,” said Commonwealth Bank of

Australia currency analyst Joseph Capurso. “The currency markets

are reacting to the increase in volatility in both those

markets.”

The euro slipped 0.2% to a three-month low of

$1.19515 following a 0.7% slump overnight.

The dollar hit an eight-month high of 108.035 yen

earlier in the session before giving up much of its gains.

Japanese Finance Minister Taro Aso declined to comment on

Article content

the yen’s decline when asked about how the depreciation would

affect the economy.

The dollar index hit a three-month high and last

stood at 91.672 in the Asian session after gaining 0.7% on

Thursday

The dollar’s gains came as the benchmark 10-year Treasury

yield jumped back above 1.5%, rising as high as

1.584% in Asia. Last week, it soared to a one-year peak of

1.614%.

Impending U.S. fiscal stimulus is adding fuel to

expectations of higher inflation, as the accelerating roll-out

of covid-19 vaccines boosts confidence in an economic recovery.

Riskier currencies including the Australian and New Zealand

dollars slid along with stocks as investor sentiment again

turned sour.

“Once the bond rout comes to an end, once the volatility

fades away, the commodity currencies (the Aussie and the kiwi)

are going to be able to climb back up because commodity prices

aren’t falling,” said Capurso at CBA.

The Aussie weakened 0.3% to $0.7705, extending

Thursday’s 0.7% drop. The kiwi fell 0.2%, adding to its

0.8% slide overnight.

In the cryptocurrency market, Bitcoin fell 2.3%

to $47,272.65. Ether dropped 3.6% to $1,483.43.

========================================================

Currency bid prices at 0359 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.1963 $1.1973 -0.08% -2.09% +1.1977 +1.1952

Dollar/Yen 107.9450 107.9400 +0.01% +4.51% +108.0050 +107.8250

Euro/Yen 129.13 129.25 -0.09% +1.74% +129.3100 +128.9000

Dollar/Swiss 0.9286 0.9288 -0.02% +4.97% +0.9296 +0.9286

Sterling/Dollar 1.3903 1.3897 +0.06% +1.79% +1.3906 +1.3868

Dollar/Canadian 1.2653 1.2667 -0.09% -0.62% +1.2694 +1.2655

Aussie/Dollar 0.7714 0.7721 -0.07% +0.29% +0.7727 +0.7688

NZ 0.7173 0.7186 -0.17% -0.10% +0.7193 +0.7157

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Kevin Buckland; Editing by Stephen Coates and

Gerry Doyle)

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