Dollar Near a Multi-Month Low as Expectations of Interest Rate Stabilization Grow

The dollar fell to its lowest level in six years against the Canadian dollar and near its lowest level in several months against European currencies on Tuesday, as US Treasury yields stabilized amid renewed expectations that the United States will not raise interest rates soon.

Robert Kaplan, head of the Federal Reserve Bank of Dallas, said on Monday again that he does not expect interest rates to rise until next year, leading to a further decline in bets that inflationary pressures may force the Fed to act sooner.

The benchmark US 10-year Treasury yield settled at 1.6471%, continuing its retreat from its five-week high reached last week.

The dollar traded at 1.22 against the euro, which reached its highest level against the dollar since February 25.

The pound rose to $1.4198, its strongest level since late February. The pound rebounded as investors were optimistic about the gradual lifting of strict restrictions related to the Coronavirus.

The Canadian dollar reached a six-year high of 1.2013 against the dollar, helped by rising oil prices.

Against the Japanese yen, the dollar lost 0.3% to 108.96 yen.

Some investors had already lowered their expectations of a federal rate hike this year, and Kaplan’s comments gave dealers a greater incentive to sell the dollar.

The yuan rose in internal transactions to 6.4279 per dollar, not far from its three-year high reached last week.

The Australian and New Zealand dollars also rose against the US dollar.

In the cryptocurrency market, it rose in Bitcoin 3.3% to $45023.53 but remained close to its lowest level in three months after Tesla Chairman Elon Musk reduced his enthusiasm for this cryptocurrency.

Competing digital currency Ethereum, linked to the Ethereum blockchain, rose 6.5% to $3,494, to stabilize after hitting a two-week low on Monday.