Yen and Dollar gain as risk sentiment falls ahead of Fed
The safe-haven Japanese yen and U.S. dollar started the week firmer versus the riskier currencies like the Australian dollar. Moreover, the increasing number of COVID-19 infections and a decline in Asian equities set a cautious tone ahead of the Fed’s meeting this week.
The Japanese yen surged nearly 0.5% against the Australian dollar to trade at 81.08. Meanwhile, the dollar against Aussie rose 0.2% to $0.7351, trading close to an eight-month high of $0.72895 hit last week.
The yen against the dollar surged 0.2% to trade at 110.32 as U.S. Treasury yields fell.
The U.S. dollar index, which tracks the greenback versus six other currencies, declined to 92.833 due to the pressure from the yen and euro. However, it was close to a 3-1/2-month high of 93.194 hit last week.
The dollar index surged almost 4% from a recent low of May 25. Remarkably, an improving U.S. economy bolstered the outlook for the Federal Reserve to start tapering asset purchases in 2021.
According to the Commonwealth Bank of Australia, the U.S. dollar is likely to continue to increase this week on expectations that the Fed is moving a step closer to tapering.
The dollar index gained 0.2% last week, benefiting from a safe-haven bid on concerns a rise in infections of the fast-spreading Delta variant could hinder the global recovery. However, it declined as strong U.S. earnings boosted stocks to record highs.
China reported its highest number of infections since the end of January
As we know, the risks from the Delta variant continue to rise globally. Notably, top infectious disease official Anthony Fauci announced that some Americans may need booster shots amid new mask mandates and a rise in new infections.
China reported its highest number of infections since the end of January. Meanwhile, new infections have also skyrocketed in Japan, where Tokyo is currently hosting the Olympics.
Additionally, Sydney, Australia’s most populated city, witnessed a surge in new COVID-19 infections on Monday despite a weeks-long stay-at-home order.
However, cryptocurrencies were lifted on Monday after the news that Amazon is looking to accept Bitcoin as a payments method by year-end.
Meanwhile, on Friday, Twitter CEO Jack Dorsey announced that digital currency is a big part of Twitter’s future.
The dominant cryptocurrency, Bitcoin, sharply gained from $29,000 to $40,000. Remarkably, Bitcoin hit $40,000 for the first time since June. At the time of writing, the most popular cryptocurrency is trading at $38,270.60, up nearly 8%.
Meanwhile, the second-largest cryptocurrency, Ethereum, also witnessed gains. It boosted from $1,717.17 to $2,336.07.
- Trading Instrument
Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. If you are interested in following the latest news on the topic, please follow Finance Brokerage on Google News.