Recovery bets push dollar to new lows By Reuters

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© Reuters. One US dollar bill

By Stanley White and Tom Westbrook TOKYO / SINGAPORE (Reuters) – The US dollar sold at multi-year lows against the British pound and the currencies of Australia and New Zealand on Monday, as investors applauded the vaccine’s progress and bet for the recovery from the pandemic that would bring world trade. boom and an export windfall. The British pound hit $ 1.4043, its highest level since April 2018, when Prime Minister Boris Johnson charts a path out of the lockdowns thanks to rapid vaccines. The Australian dollar rose as much as 0.5% to a nearly three-year high of $ 0.7908 and the hit $ 0.7338, also its best since early 2018, helped by S & P’s improvement of New Zealand’s sovereign credit ratings by a notch. . The euro held steady at $ 1.2119, while the yen was the only major to lose ground to the dollar, as rising US Treasury yields drew investment inflows from Japan. Benchmark 10-year Treasury yields rose to 1.3940%, their highest level since February 2020, and the dollar rose 0.2% to buy 105.73 yen. With local yields anchored by the Bank of Japan, the yen remains particularly sensitive to the US bond market and has fallen 2% this year, while 10-year US yields have risen almost 50 basis points. [US/] Sovereign yields in other parts of Asia have gained on par, or in the case of Australia and New Zealand, well above US rates, leaving little or no relative benefit for the dollar as investors begin to price a rebound in global inflation. “There is a tide of higher rates across the board, and if the United States gains five basis points more than Germany it is neither here nor there,” said Jason Wong, senior market strategist at BNZ in Wellington. “The bigger picture is that (the United States) has a massive issuance of debt as a stimulus and to find a buyer for that debt you need higher rates or a lower currency or both, and right now we are getting both.” It was stable at 90.355. HOT RAW MATERIALS In addition to the US budget deficit, a growing trade deficit has also weighed on the dollar, as have the huge gains that rising commodity prices have provided to exporters’ currencies. has gained about 8% during the year and hit a nine-year high on Monday, oil has gained more than 22% so far this year, iron ore about 10% and dairy prices almost 7%. The Australian dollar, which rose nearly 40% from the March low to the end of 2020, has added another 2% this year, while the kiwi and the Canadian dollar have added 1% or more and analysts said the rallies they might have to run more. “We are recommending a long business idea,” MUFG Bank analysts said in a note to clients. “The Australian continues to benefit from the outperformance generated by creating optimism about the outlook for growth / global revival, which is helping to improve Australia’s terms of trade.” The bank is also recommending a long position in the British pound, as diminishing Brexit uncertainty and strong progress in vaccinating the British population herald a strong economic recovery. On Monday, British Prime Minister Johnson is expected to outline a roadmap out of the lockdowns, a poll of German sentiment is expected and European Central Bank President Christine Lagarde is expected to sound dovish in a speech that will begin. at 1345 GMT. Later in the week, New Zealand’s central bank sets policy on Wednesday and then US Federal Reserve Chairman Jerome Powell testifies before Congress, also on Wednesday. In the cryptocurrency market, bitcoin dipped slightly to $ 56,159, but was still close to a record as the digital asset gains more widespread acceptance. Ether, a rival cryptocurrency, fell to $ 1,871.