Dollar inches down but “Regains Mojo” as fed deflects early interest hike hopes

NEW YORK: The dollar inched down on Friday morning in Asia but was boosted by rising Treasury yields and a fall in global shares. Investors also continue to contemplate the U.S. Federal Reserve’s deflection of early interest-rate hike expectations.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.01 at 91.862 by 11:59 AM ET (3:59 AM GMT).
The USD/JPY pair inched up 0.01% to 108.89.
The AUD/USD pair edged down 0.18% to 0.7742 and the NZD/USD pair inched up 0.01% to 0.7166.
The USD/CNY pair edged up 0.13% to 6.5136 and the GBP/USD pair inched down 0.03% to 1.3916.
The benchmark U.S. 10-year yield climbed to a more than one-year peak of 1.754% during the previous session before dropping to 1.715%. The Fed handed down its policy decision on Wednesday and pledged to carry on with aggressive monetary stimulus.
“After some navel-gazing,” bond investors “concluded that the Fed is not [posing] any challenges or discomfort for longer-dated UST yields to keep pushing higher,” National Australia Bank (OTC:NABZY) senior FX strategist Rodrigo Catril said in a note.
“The USD regained its mojo,” the note added.
Rounding up a week of central bank policy decisions, the Bank of Japan (BOJ) handed down its own decision earlier in the day. BOJ also announced the results of a comprehensive policy review and was expected to slightly widen the implicit band in which it allows long-term interest rates to move around its 0% target.
The Bank of England (BOE) handed down its decision the day before. It also warned that the outlook for U.K.’s recovery from COVID-19 remained unclear, which disappointed expectations that BOE would signal a more confident outlook.
Elsewhere in Europe, several countries, including Germany and France, plan to resume usage of the AstraZeneca (NASDAQ:AZN) PLC/University of Oxford COVID-19 vaccine. The European Medicines Agency (EMA)’s endorsement of the vaccine on Thursday to calm jitters over potential side effects is set to give the continent’s COVID-19 vaccination rollout a boost.
However, a third wave of COVID-19 cases in France saw Paris and other parts of the country enter a fresh lockdown, dampening investor sentiment. The euro slipped 0.1%, extending Thursday’s 0.5% drop.
In cryptocurrencies, bitcoin weakened to around $56,703 as the Asian trading session got underway, after briefly surpassing the $60,000 mark during the previous session. It had climbed to a fresh record high of $61,781.83 during the previous week, after more than doubling since the start of 2021.
“Bitcoin is a momentum trade, and it feels like it could go a lot further… is it a bubble? Yes. But it can easily go to $100,000 before it comes crashing down,” OANDA senior market analyst Edward Moya told Reuters.