The greenback and Japanese yen gained everywhere as US yields fell on Monday, as an increase in cases of global Covid variants along with a drop in stocks triggered widespread risk aversion. (The Dow Jones fell 725 points or 2.09% for its worst drop since October 2020 and ended at 33,962, the US 10-year benchmark yield fell from a more than 5-month low to 1.176% ).
Against the Japanese yen, the dollar met a further sell off at 110.10 in New Zealand and fell to 109.86 on the Asian open. The intra-day decline accelerated in Europe and the pair fell to a nearly 2-month low at 109.07 in New York morning on falling US yields before staging a hedging rebound to 109.57 At New York.
The single currency traded sideways within a narrow range in Asia before falling to a 3.5 month low at 1.1765 as New York opened. However, the price erased its losses and reached session highs at 1.1824 in New York in part due to euro cross-buying, particularly against the British pound, as well as a widespread rebound in the USD.
The British pound met a new sell off at 1.3778 in New Zealand and fell to 1.3748 in the Asian morning. The intra-day decline accelerated in Europe following the increase in Covid cases in the UK and the price fell to a 5.5-month low at 1.3655 in New York following a massive sell-off in pounds before stabilizing.
In other news, Reuters reported on Monday that US President Joe Biden said a price hike should be temporary, but his administration understood longer-term runaway inflation would present a “real challenge” for the company. economy and would remain vigilant. Biden said he recently told Federal Reserve Board Chairman Jerome Powell that the Fed is independent and should take whatever action it deems necessary to support a strong and lasting recovery.
Data to be released Tuesday:
National CPI of Japan, producer prices in Germany, Swiss trade balance, exports, imports, EU current account, US building permits, housing starts, rebook and New Zealand GDT price index.