April 17, 2021

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Dollar firms after U.S. yield spike; yen continues march lower

4 min read

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TOKYO — The U.S. dollar held gains on

Friday after rebounding overnight from three-year lows following

a spike in U.S. bond yields.

The yen, which tends to weaken when U.S. yields rise, slid

to a fresh six-month low versus the greenback.

Government bonds, and particularly U.S. Treasuries, have

become the focal point of markets globally, which have

aggressively moved to price in earlier monetary tightening than

signaled by the Federal Reserve and its peers.

The yen’s decline came even amid a sell-off in stocks, as

the surge in yields fomented inflation worries. The yen and

dollar are both traditional haven currencies.

Emerging-market and commodity-linked currencies retreated,

with the Australian and Canadian dollars stepping back from

three-year highs.

Cryptocurrencies also tumbled, with bitcoin sliding 5%

overnight and ether dropping 9%.

“The fixed income rout is shifting into a more lethal phase

for risky assets,” after initially being interpreted as a “story

of improving growth expectations,” Westpac strategists wrote in

a client note.

“It appears to be the case that bond markets are ‘taking on’

the central bankers’ world view, and standing in front of the

current momentum is unwise.”


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Bond yields have climbed this year on the outlook for

massive fiscal stimulus amid continued ultra-easy monetary

policy, led by the United States.

An acceleration in the pace of vaccinations globally has

also bolstered what has become known as the reflation trade,

referring to bets on an upswing in economic activity and prices.

In recent days though, a rise in inflation-adjusted bond

yields has accelerated, indicating a growing belief that central

banks may need to pare back ultra-loose policies, despite their

dovish rhetoric.

The benchmark 10-year Treasury yield spiked

above 1.6% overnight for the first time in a year, after an

auction of $62 billion of 7-year notes was met with weak demand.

The dollar index edged up to 90.381, holding on to a

0.2% rise from Thursday, when it rebounded from losses of as

much as 0.26% before the bond tender.

The greenback was little changed at 106.2 yen

after earlier touching 106.43 for the first time since

September. It has strengthened 2.8% after the first back-to-back

monthly increases since mid-2018, putting the yen among the

worst performing major currencies this year.

The Australian dollar continued its retreat after

topping $0.80 on Thursday for the first time since February of

2018, declining 0.2% to 0.78525.

The Canadian dollar weakened to C$1.2613 after

falling from its own three-year top to the greenback at C$1.2468


The euro weakened 0.1% to $1.2158 after touching a


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seven-week high of $1.22435 on Thursday.

Bitcoin was slightly weaker Friday at $46,704,

while ether slipped to $1,476.


Currency bid prices at 110 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change


Euro/Dollar $1.2156 $1.2175 -0.14% -0.49% +1.2185 +1.2137

Dollar/Yen 106.2270 106.2100 +0.02% +2.85% +106.4170 +106.1700

Euro/Yen 129.14 129.35 -0.16% +1.75% +129.5300 +128.9900

Dollar/Swiss 0.9054 0.9051 +0.04% +2.35% +0.9066 +0.9049

Sterling/Dollar 1.3991 1.4009 -0.14% +2.39% +1.4024 +1.3950

Dollar/Canadian 1.2619 1.2605 +0.09% -0.93% +1.2647 +1.2598

Aussie/Dollar 0.7848 0.7870 -0.27% +2.03% +0.7882 +0.7823

NZ 0.7348 0.7370 -0.28% +2.34% +0.7380 +0.7310


All spots

Tokyo spots

Europe spots


Tokyo Forex market info from BOJ

(Reporting by Kevin Buckland; Editing by Stephen Coates)

In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.


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2021-02-26 03:54:42

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