Currencies Overview: The Dollar Winning And Risk Currencies Are Losing

The dollar rose today, recovering from losses incurred the previous day, as a strong rise in Treasury yields in the early European session sparked risk aversion moves in global currency markets, while riskier currencies were hit.

Market dealers are growing anxious in recent weeks about the possibility of a strong rise in inflation due to the huge financial stimulus and pent-up demand for consumers when economies reopen from the general isolation measures aimed at combating the Coronavirus.

Although weak US consumer price index data on Wednesday calmed those concerns somewhat, US Treasuries saw a sell-off on Friday, while the yield on the 10-year note rose above 1.6%.

The dollar rose 0.4% during the session, to 91.835, but was still below the high of 92.506 it reached on Tuesday, its strongest level since November 2020.

The dollar index remains on track to finish the week, down by 0.1%.

High-risk currencies took losses, erasing recent gains. The Australian dollar, which is considered an indicator of liquidity in risk appetite, fell 0.5% to 0.77457 against the US dollar.

The New Zealand dollar fell 0.6% against the US dollar. And the Norwegian krone lost against the euro and the dollar.

On Thursday, the European Central Bank said it would accelerate the pace of money printing to prevent higher Eurozone bond yields.

Although the euro is down about 0.5% to $1.19325, it is still on the way to ending the week, up 0.2%.

The market’s attention now turns to the Federal Reserve meeting next week, when traders will be looking for any comments on higher yields.

The dollar rose to the yen by 0.6%, to trade at 109.140, near a peak of 109.235 recorded on Tuesday, which is the weakest performance for the yen since June 2020.

Bitcoin was trading at about $56,738, after it approached its recent record high of $58,354.14, without surpassing it.