Dollar lingers close to one-week low

24 Sep 2021

The Dollar remained over a one-week low against major rivals on Friday following its largest fall in nearly a month overnight.

In addition, the Yen dropped to its weakest since the middle of the month as Treasury yields rose to the highest level since the beginning of July.

The Dollar index – measuring the currency against six rivals – increased 0.04% to 93.142 after declining 0.36% on Thursday to the lowest since 17 September at 92.977. This eliminated the week’s gains, setting up the index for a 0.09% fall.

The Dollar was impacted as Beijing pumped more cash into the financial system on Thursday, when Chinese property developer Evergrande announced it would settle interest payments on an onshore bond, Reuters reports. That said, a number of its offshore bond holders claimed to have not received coupon payments by Thursday’s deadline.

The U.S. Dollar gained 0.14% to 110.48 Yen, previously hitting 110.49 as benchmark U.S. Treasury yields reached 1.452% in Tokyo.

Furthermore, a hawkish stance from the Bank of England on Thursday drove up yields globally, after the Federal Reserve announced it may begin tapering its monthly bond purchases by November, and rates may rise more quickly than forecast by 2022.

The Pound was little changed at $1.3717 after reaching $1.3750 overnight for the first time since 20 September.

The Euro stayed mainly flat at $1.1740, after rallying from a one-month low on Thursday of $1.16835.

Moreover, there was barely any change to the Australian Dollar at $0.7296 after previously reaching a one-week high of $0.73165.

According to Westpac, the Dollar index will be flat to marginally higher towards the end of the year, sticking to a range of 92.0-93.5 in the near-term.

“The Fed’s clear taper signal and inching forward of rate lift-off plans, not to mention ongoing uncertainty around Evergrande, should contain the downside,” said Westpac strategists.