The U.S. dollar index fell to a 2-week low again on Thursday (19th), continuing the downward trend from a 20-year high. Funds poured into the Japanese yen and Swiss franc, which are also safe-haven currencies. Major currencies weighed down by a strong dollar rose broadly.
In late New York trade, the ICE U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, was down 0.90% at 102.88, its lowest since May 5.
The dollar fell sharply against safe-haven currencies such as the yen and Swiss franc, which tend to attract inflows at times of stress or risk in markets as volatility intensified in global financial markets.
However, the U.S. dollar also underperformed against risky currencies including the Australian dollar and New Zealand dollar, which were sluggish this year due to the strong dollar, and finally attracted buying after months of slumping.
“Investors may have had enough of the dollar and are trying to spread risk, especially as rising U.S. bond yields have reached their limit,” said Shaun Osborne, chief currency strategist at Scotia Bank.
In terms of economic data, the United States announced that the number of people receiving unemployment benefits unexpectedly rose last week, adding 218,000 people, the highest since January this year, but the labor market is still tight. On the other hand, the Philadelphia manufacturing index fell sharply to 2.6 in May from 17.6 in the previous month, far less than expected and the lowest since the beginning of 2020.
The dollar fell 0.37% against the yen to 127.81 yen, the lowest intraday drop to 127.03, the lowest in three weeks, and the dollar against the Swiss franc fell 1.64% to 0.9718 Swiss franc, a two-week low.
Still, analysts cautioned against over-interpreting the dollar’s decline.
Simon Harvey, head of foreign exchange analysis at Monex Europe, said: “The dollar is broadly lower today despite strong risk aversion across asset sectors, but does that mean the dollar’s safe-haven status has declined? Probably not.”
Swiss National Bank President Thomas Jordan said on Wednesday that the Swiss central bank was ready to take action if inflationary pressures persist, a remark that also supported the Swiss franc and the euro.
The euro rose 1.14% to $1.0580, a more than one-week high, as investors price in the possibility of aggressive policy tightening by the European Central Bank (ECB) in the near term.
The minutes of the European Central Bank’s April meeting showed that the central bank’s Governing Council generally agreed to end its bond-buying program in the third quarter and supported a 25 percent rate hike as soon as July.
Other major currencies rose in unison, with the pound up 1.01% to $1.2462, the Australian dollar up 1.30% to $0.7046 and the New Zealand dollar up 1.35% to $0.6382.
As of Friday (20th) Taiwan time about 6:00 Price:
The dollar index was at 102.8909. -0.9897% The euro against the US dollar (EUR/USD) was quoted at $1.0583 per euro. +1.1662% GBP/USD (GBP/USD) was quoted at $1.2470. +1.0617% The Australian dollar against the US dollar (AUD/USD) was quoted at $0.7046 to 1 Australian dollar. +1.3521% The US dollar against the Canadian dollar (USD/CAD) was quoted at 1.2819 Canadian dollars per US dollar. -0.5122% The U.S. dollar against the Japanese yen (USD/JPY) was at 127.83 yen per dollar. -0.3586%