The dollar fell for the first time in seven years amid a recession in US yields

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Tokyo — The US dollar headed for the worst week since early February against its major peers on Friday. After a breathtaking 10%, 14-week surge in the currency, it was squeezed by the Treasury’s yield recession and fatigue.

The dollar index, which measures it against six major rivals, went on track to record a six-week win, dropping 1.5% in a week to 102.96. A week ago, it soared to 105.01, the highest since January 2003.

US as an investor despite China’s strict blockade to curb the outbreak of COVID-19 as global equities continue to fall amid growth risks from aggressive monetary tightening led by the Federal Reserve The fall in yields has overturned the dollar’s appeal as a shelter. I hurried for the security of the Treasury bonds.

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Benchmark 10-year Treasury yields fell overnight from a three-and-a-half-year high of 3.2% earlier this month to a three-week or more low of 2.772%.

“The dollar was ripe for a pullback,” OANDA senior analyst Edward Moya said in a note to clients. “The overall weakness may last a little longer.”

The currencies of other safe shelters continued to rise overnight, with key indicators of global equities heading for the longest-ever fall in the seventh week.

The yen fell 1.16% from last Friday to 127.785 yen, heading up twice a week for the second time in a row.

The Swiss franc headed for the highest week since March 2020, with the dollar falling 2.9% at 0.97265 francs over the period leading up to the final transaction.

Concerns have been raised that the Federal Reserve and other central banks are lagging behind in the fight against hyperinflation, and as a result need to be more aggressive in tightening policies that hurt the economy.

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The war in Ukraine is also showing no signs of waning, obscuring the outlook for commodity price-driven inflation.

China’s path out of the coronavirus blockage remains unclear, even though Shanghai is preparing to allow more companies in the Zero-COVID region to resume normal operations from the beginning of June. , Threatening global price pressure.

The Australian and New Zealand dollars have gained some support from signs of reopening of key trading partners, despite the risk-off tone of the stock market.

Australia recovered 1.4% this week and Kiwi increased 1.49%.

However, the Australian currency fell on Friday, down 0.23% to $ 0.7031. This is because the US dollar jumped a bit after Australia surged 1.33% on Thursday.

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“China’s strict blockade is the main reason why the AUD has deviated significantly from the level implied by its fundamentals,” said Carol Kong, an analyst at the Commonwealth Bank of Australia.

“We are confident that the AUD will be able to recover strongly if the blockade is eased by China’s commitment to spend more on infrastructure.”

Kiwi in New Zealand maintained all of the 1.41% jumps the day before, but rose slightly to $ 0.63845. The Reserve Bank of New Zealand has set a policy next Wednesday and expects the key rate to be cut in half.

The euro fell 0.07% to $ 1.05735 on Friday, but was still on track for a 1.55% rise per week.

Sterling fell 0.07% to $ 1.24615, but this week it rose 1.66%, the highest since late 2020.

Westpac analysts warned not to count the dollar, even if the rally “has lost some of its vitality.”

“It’s too early to reach a long-term peak in the volatile global market conditions and the resolute federal government,” an Australian bank analyst recommended buying in a dip in the 102s. We are aiming for 105 over the next few weeks.

(Report by Kevin Buckland, edited by Robert Birsel)