The US dollar edged lower on Friday, along with the Japanese yen, as riskier currencies were favored, with a rally in US Treasuries running out of steam and global stock markets steadying.
Some soft US data, along with a surge in COVID-19 cases in many parts of the world, has fueled concerns that the global economic recovery was running out of steam, leading to an eight-day streak of declines for the 10-year Treasury yield that ended on Friday.
“This week was all about the bond market and the collapse in Treasury yields,” said Edward Moya, senior market analyst for the Americas at Oanda Corp. “Some of that move was probably overdone.”
The rise in yields supported riskier assets and currencies, with global stock markets rising and the commodity-linked Australian and New Zealand dollars catching a bid.
The Australian dollar rose 0.79 percent to US$0.74905, after earlier touching a fresh low for the year at US$0.7410, and the New Zealand dollar added 0.81 percent to US$0.7002, having plunged more than 1 percent in the previous session.
In Taipei, the New Taiwan dollar fell against the greenback, losing NT$0.052 to close at NT$28.086, down 0.34 percent for the week.
The euro extended gains on top of a 0.45 percent jump on Thursday, rising 0.27 percent to US$1.1876.
The US dollar index slid 0.34 percent to 92.10, down 0.1 percent for the week.
The greenback’s decline was likely due in part to profit-taking ahead of key US inflation data for last month due next week, Western Union Business Solutions senior market analyst Joe Manimbo said.
“Dollar bulls are just pulling some chips off the table,” he said.
The yen, perceived as a safe-haven currency, declined as risk appetite began to recover.
“Yesterday’s decline in dollar-yen is reversing together with risk appetite in equities suggesting no wider spillover effects across markets for now — the same move is seen in the US 10-year yield bouncing back above 1.3 percent,” Saxo Bank A/Schief investment officer Steen Jakobsen said.
The yen eased 0.39 percent to ￥110.185 per US dollar, giving back some of its gains against the greenback from Thursday, when it had its biggest daily rise since November last year.
The Canadian dollar strengthened 0.61 percent against the US dollar to US$1.2453 as oil prices rose and data showed that Canada added more jobs than expected last month as public health restrictions were eased in several regions of the country.
Elsewhere, the People’s Bank of China said it would cut the reserve requirement ratio — the percentage of deposits lenders must hold on to — for all banks by 50 basis points, effective from Thursday, helping spur the move back into riskier assets.
Additional reporting by CNA, with staff writer
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