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Dollar hovers near two-week low after U.S. yields slip

Wednesday,   07-Apr-2021   03:16 PM (IST)

The dollar hovered near two-week lows after U.S. bond yields eased from recent highs, while market participants waited for the Federal Reserve’s meeting minutes due later in the session to help determine the future path for the dollar. The previous quarter saw a spike in U.S. Treasury yields and the dollar’s strongest rally in years, on rising expectations that accelerating U.S. economic growth and inflation could force the Fed to abandon its pledge to keep interest rates near zero until 2024. The International Monetary Fund said on Tuesday that unprecedented public spending to fight the pandemic would push global growth to 6% this year. But the bond market has stabilised so far this week, with the 10-year U.S. Treasury yield at 1.64%, down from its peak of 1.776% at the end of March. At 0716 GMT, the dollar was at 92.368 against a basket of currencies, close to a two-week low, having fallen from its recent high of 93.439, which it hit on March 30. Market participants were waiting for the Fed meeting minutes, due to be released later in the session, for hints about the Fed policymakers view on rising yields. U.S. money markets are pricing in a 25 basis point hike in December 2022. Euro-dollar was steady at $1.18705, having strengthened so far in April. So far in 2021, the euro has been driven by prospects of the economic recovery from COVID-19 in Europe lagging that of the United States and Britain, but the euro has picked up over the past week.