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FOREX-Dollar on defensive as risk sentiment improves; kiwi rallies after RBNZ

Published 24/02/2021, 04:02 pm
© Reuters.
EUR/USD
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* Riskier assets buoyed after Fed's Powell says low rates to stay

* Kiwi rallies to 3-year high after initial dip on RBNZ decision

* Bitcoin retakes $50,000 following steep plunge from record high

By Stanley White and Kevin Buckland

TOKYO, Feb 24 (Reuters) - The U.S. dollar slipped to three-year lows against the British pound and antipodean currencies on Wednesday as the promise of extended easy monetary conditions globally boosted investor appetite for riskier assets.

The New Zealand dollar dipped briefly before rallying to the highest since April 2018 after the country's central bank emphasised patience over the timing of exiting ultra-easy policy settings.

U.S. Federal Reserve Chair Jerome Powell reiterated on Tuesday that interest rates will remain low and the Fed will keep buying bonds to support the U.S. economy, which many analysts and investors view as a long-term negative factor for the greenback.

Money flowed from safe havens like the dollar toward currencies that are expected to benefit from a pick-up in global trade, and to countries like Britain that are bouncing back quickly from the coronavirus pandemic.

"Signs of economic recovery are lifting commodities prices, which in turn supports currencies of commodities exporters," such as the Australian dollar, said Junichi Ishikawa, foreign exchange strategist at IG Securities.

"Risk appetite has improved a lot, and this leaves the dollar at a big disadvantage."

The dollar index =USD against a basket of six major currencies was at 90.111, hovering near the six-week low of 89.941 it reached overnight.

The Australian dollar AUD=D3 , which tends to benefits from rising metal and energy prices, jumped to a three-year high of $0.7945 before paring gains to trade 0.1% stronger at $0.7914.

The New Zealand dollar NZD=D3 rose as high as $0.7384, following an knee-jerk dip, after the Reserve Bank of New Zealand (RBNZ) expressed some caution about the outlook, potentially disappointing traders who expected the monetary authority to acknowledge a recent improvement in economic data. markets have been flirting with the idea that the RBNZ could tighten monetary policy next year, and today's statement will have discouraged those holding that view," Westpac analyst Dominick Stephens wrote in a client note.

"The RBNZ wants to see the whites of the eyes of inflation and employment before it shifts monetary policy."

The British pound GBP=D3 rose 0.3% to $1.4158 after earlier touching $1.4295 for the first time since April 2018.

The outlook for sterling has brightened as investors cheer Britain's rapid coronavirus vaccination programme and its plans to ease lockdown restrictions on economic activity.

The euro EUR=D3 bought $1.21495, close to the one-month high of $1.2180 set overnight.

The dollar managed to rise against other traditional haven currencies, adding 0.2% to 105.485 Japanese yen JPY=EBS and hitting an almost three-month high against the Swiss franc CHF=EBS .

The Fed's Powell pushed back against suggestions that loose monetary policy will lead to runaway inflation and financial bubbles, which have emerged as two important worries this year, because there is growing scepticism about the rapid pace of gains in global stock markets. economies that have limited disruptions caused by the coronavirus outbreak, their central bankers now face questions of when to start tightening policy, which makes the dollar look less attractive, some analysts say.

In the cryptocurrency market, bitcoin BTH=BTSP recovered to trade above $50,000 following a sharp plunge this week from its record high of $58,354.14 reached Sunday.

Square Inc (NYSE:SQ) SQ.N said on Wednesday it had invested $170 million in the digital asset in the fourth quarter, but some analysts still argue that bitcoin's recent surge was excessive. digital currency ether ETH=BTSP rebounded from its own steep sell-off to trade up slightly at $1,618.

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Currency bid prices at 442 GMT Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=EBS

$1.2150

$1.2150

+0.00%

-0.56%

+1.2166

+1.2143 Dollar/Yen

JPY=D3

105.4850

105.2600

+0.23%

+2.14%

+105.5220 +105.2400 Euro/Yen

EURJPY=

128.17

127.86

+0.24%

+0.98%

+128.2700 +127.7800 Dollar/Swiss

CHF=EBS

0.9065

0.9054

+0.12%

+2.46%

+0.9065

+0.9048 Sterling/Dollar GBP=D3

1.4162

1.4112

+0.38%

+3.69%

+1.4234

+1.4111 Dollar/Canadian CAD=D3

1.2577

1.2590

-0.08%

-1.21%

+1.2595

+1.2560 Aussie/Dollar

AUD=D3

0.7911

0.7909

+0.03%

+2.85%

+0.7943

+0.7903 NZ

NZD=D3

0.7360

0.7343

+0.26%

+2.52%

+0.7382

+0.7317 Dollar/Dollar

All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates

https://tmsnrt.rs/2RBWI5E

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

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