On Tuesday, the American Dollar gained ground against most major and emerging market currencies, while the greenback soared to a one-year peak against safe-haven Japanese yen as an acceleration in pandemic vaccination drive in the US alongside the US President Joe Biden’s multi-billion-dollar infrastructure plan, stoked angsts of a higher inflation and pushed benchmark 10-year US Treasury bond notes to a 14-month peak, cementing ways of a broad-based gain of US Dollar.
Apart from that, a recent setback in the global equity markets stemming from a collapse of hedge fund, Archegos Capital, added to further bullish wind on US Dollar’s safe-haven bid, while a sharply depreciating gold futures alongside a selling wave of crude oil futures followed by resumption of traffics in the Suez Canal after nearly a week, added further supports for the greenback’s safe-haven bid.
On top of that, the US President Joe Biden is expected to unveil how he intends to finance a $3- to $4-trillion mega infrastructure plan on Wednesday, fuelling up worries of a higher inflation which in effect had swelled the US Dollar’s safe-haven bid further while drowning gold futures’ prices.
US Dollar rallies, spikes to one-year peak against Japanese Yen
Citing statistics, in the day’s FX market closure, the US Dollar Index (DXY) measured against a basket of six major currencies on an average, rose above 93-mark for first time since November and winded down the day at 93.18, the Index’s highest level in more than four months, while the greenback soared 0.5 per cent to above 110 yen per Dollar against its Japanese counterpart, a level never witnessed since March 2020.
Apart from that, the bloc’s common currency euro, shared among 19 member states in the euro zone, faltered to a four-month low of $1.1729 against its American peer. Meanwhile, forecasting a further upswing in long-term US Treasury bond Yields, a currency economist in MUFG, Lee Hardman said, “Upward pressure on long-term US yields is expected to be supported by another fiscal stimulus policy announcement from the Biden administration”.