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FOREX-Dollar rises to one-month high; riskier currencies fall as shares falter

Published 02/03/2021, 08:07 pm
Updated 02/03/2021, 08:12 pm
© Reuters.
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* Dollar index at one-month high

* Aussie and Kiwi dollars fall

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

LONDON, March 2 (Reuters) - The dollar rose to its highest level in a month against its basket on Tuesday and riskier currencies fell back, as underlying concerns about rising bond yields drove investors back into safe-haven assets.

Rising yields have spooked markets in recent weeks, with participants worried that an economic recovery from the impact of COVID-19, combined with fiscal stimulus, could cause a jump in inflation from pent-up consumer demand when lockdowns end.

Riskier currencies including the Australian and New Zealand dollars recovered some recent losses on Monday, as yields fell back and stock markets rallied. But they resumed their decline on Tuesday. dollar rose to its highest in a month versus a basket of currencies, up 0.3% on the day at 91.326 at 0808 GMT, in its fourth straight session of gains =USD .

The Swiss franc was at its lowest since November 2020 against the dollar CHF=EBS . Dollar-Swiss has been rising since early January and gained some 3.8% so far in 2021.

"With low-yielders mostly bearing the brunt of any equity rally for now, even if risk assets move back into positive area today later today, USD may still prove its resilience," wrote ING strategists in a note to clients.

China's banking and insurance regulator expressed wariness of the risk of bubbles bursting in foreign markets, and said Beijing is studying measures to manage capital inflows to prevent turbulence in the domestic market. New Zealand dollar was down around 0.6%, at 0.7222 versus the U.S. dollar NZD=D3 .

The Australian dollar was down 0.3% at 0.7747 versus the U.S. dollar AUD=D3 , after the Reserve Bank of Australia re-committed to keeping interest rates at historic lows. continue to believe, though, that the strengthening global recovery boosted by continued loose monetary and fiscal policies will remain supportive for higher commodity prices and a stronger Australian dollar in the year ahead," wrote MUFG currency analyst, Lee Hardman.

The euro fell, after top European Central Bank officials sounded alarm over the rises in bond yields.

Policymaker Francois Villeroy de Galhau said on Tuesday that some of the recent rises were unwarranted and that the ECB must push back using the flexibility embedded in its bond purchase programme. Vice President Luis de Guindos said the ECB had the flexibility to counter any undesired rise in yields. participants said that the ECB and the U.S. Federal Reserve were taking divergent tones on rising bond yields, with the Fed appearing less concerned. 0842 GMT, the euro was down 0.3% at $1.20125, having hit its lowest in nearly a month EUR=EBS .

A flash estimate of euro zone inflation for February is due at 1000 GMT.

Elsewhere, bitcoin was a touch lower, down 1% at around $49,000 at 0834 GMT, having recovered some recent losses in the previous session BTC=BTSP .

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