Dollar sets for first weekly decline in seven weeks amid US yield retracement According to Reuters

© Reuters. FILE PHOTO: The US one hundred dollar bill is seen in this illustration taken in Seoul February 7, 2011. REUTERS / Lee Jae-Won / File Photo

By Kevin Buckland

TOKYO (Reuters) – The US dollar topped its worst week since early February against major currencies on Friday, weighed down by a slump in Treasury yields and fatigue after the coin spiked 10% in 14 weeks.

The index that measures it against six major rivals, managed to regain some ground over the weekend, up 0.05% to 102.96, but still 1.42% lower for the week, on track to hit the series. six weeks of victory. Last Friday, it rose to its highest level since January 2003 of 105.01.

Even as global stocks fell this week amid risks to growth from aggressive monetary tightening – led by the Federal Reserve – and China’s strict lockdown measures to quelling the COVID-19 outbreak, the dollar’s appeal as a haven was eclipsed overnight by falling US yields. Investors flocked for the safety of Treasuries.

The benchmark fell to a more than three-week low of 2.772% on Thursday, from a 3 1/2-year high of more than 3.2% earlier this month.

“The dollar is ripe for a pullback,” wrote Edward Moya, senior analyst at OANDA, in a note to clients. “The weakness across the board could continue for some time.”

Other safe-haven currencies continued to rally overnight, as a key index of global equities headed for its seventh weekly drop, its longest-ever drop.

Asian stocks rallied some points on Friday, boosted by China’s cut to a key lending standard to slow the country’s economic slowdown. [MKTS/GLOB]

The yen edged up slightly on Friday, heading for its second consecutive weekly gain, with the dollar falling 0.84% ​​to 128.13 yen over the period.

The Swiss franc is heading for its best week since March 2020, with the dollar down 3.1% since last Friday to 0.97070 francs.

Concerns are growing that the Fed and other central banks have fallen behind the curve in the fight against hyperinflation, and will need to be more aggressive in tightening policy, resulting in a cause a lot of damage to the economy.

The war in Ukraine also shows no signs of abating, dimming the outlook for inflation driven by commodity prices.

China’s path out of the coronavirus lockdown also remains unclear, threatening more global price pressure, even as Shanghai prepares to allow more businesses in COVID-free regions to operate normally. usually return from early June and their ports are now operating at 90% capacity.

Antipodean coins have received support from signs of reopening in their major trading partner, with a gain of 1.24% this week and a further gain of 1.51%.

However, the Australian currency slipped on Friday, falling 0.35% to $0.7023, after it gained 1.33% in the previous session.

Joseph Capurso, strategist at Commonwealth Bank of Australia (OTC:) said: “Australians disproportionately benefited yesterday from the China news, so I think there was just a bit of no OK on that, maybe some positions are going.”

The New Zealand kiwi, though kept all of the previous day’s 1.41% gain, added a little more to $0.6385. The Reserve Bank of New Zealand sets policy on Wednesday, with expectations of another half-point rise in the key rate.

The euro fell 0.1% on Friday to $1.05725, but is still on a weekly basis up 1.56%.

The British pound fell 0.11% to $1.2457, but gained 1.49% for the week, its best level since late 2020.

Westpac analysts warn against counting the dollar out, even if its rally “lost some of its vitality”.

“It’s still too early to call a long-term top, amid volatile global market conditions and a resolute Fed,” the Australian bank analysts wrote in a research note, recommending buy on dips. down to 102 and target 105 for weeks.

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