Dollar pares losses as reflation trade sends yields higher

Monday,   22-Feb-2021   03:07 PM (IST)

The U.S. dollar pared losses  after hitting multi-year lows against sterling and the Australian and New Zealand currencies as vaccine progress, expectations for faster economic growth and inflation sent bond yields higher. Yields on 10-year U.S. and German government bonds hit one-year and eight-month highs respectively as traders continued to play reflation trades. The British pound was holding the $1.40 line after reaching 1.4043, its highest since April 2018, as Prime Minister Boris Johnson charts a path out of lockdowns on the back of rapid vaccinations. The Aussie rose as much as 0.5% to an almost three-year high of $0.7908 before letting the dollar come back to 0.7864. The kiwi hit $0.7338, also its best since early 2018, helped by S&P’s upgrade of New Zealand’s sovereign credit ratings by a notch, but also saw the greenback gradually pare most losses. The yen lost 0.33% at 105.78 while the euro lost 0.2% at $1.2095 ahead of a German sentiment survey and a speech at 1345 GMT by European Central Bank President Christine Lagarde. All in all, the U.S. dollar index was up 0.28% at 90.543. In the cryptocurrency market, bitcoin eased from the record high of $58,354.14 hit during the weekend, retreating to $56,039.