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FOREX-The dollar remains touched after a 7-week low due to the fall in yields in the US

Por Kevin Buckland

TOKYO, Apr 21 (Reuters) – The dollar barely lifted its head on Wednesday, hovering just above a seven-week low as low US bond yields reduced the currency’s appeal.

The green coin, considered a safe haven, received some boost from the retreat of global stock markets from their all-time highs, as outbreaks of coronavirus infections, from India to Canada, worsened prospects for a rapid global recovery.

Stability bid also boosted the yen, which hit a new seven-week high of 107.88 per dollar on Wednesday.

The dollar index, which tracks the evolution of the greenback against its six major pairs, stood at 91.254 in Asia, after falling to 90.856 on Tuesday for the first time since March 3. So far this month, it is down 2.1%.

The index “has broken through a key short-term support level at 91.30 and may see further declines to the low 90s,” with the euro rising to around $ 1.22, Westpac strategists said at a note to customers.

“We expected the index to peak in the third quarter, when second-derivative reactivation measures in the United States hit their peak and Europe catches up on vaccines, but early indications are that vaccines across Europe they are already accelerating, “Westpac said.

The single currency was trading at $ 1.20275, after hitting a seven-week high of $ 1.2079 overnight.

The European Central Bank will decide its strategy on Thursday, and the Federal Reserve and the Bank of Japan will do so next week.

The 10-year US Treasury yield, the benchmark for US debt, stood at around 1.56%, not far from its low since mid-March, while continuing to consolidate after its decline from the 14-month high in the 1.7760% reached at the end of last month.

“Now that US Treasury yields have started to decline, people are closing short yen positions,” said Tohru Sasaki, head of Japanese market research at JPMorgan.

The yen could strengthen to 105 per dollar in the short term, he said. At the end of last month, the Japanese currency traded at 110.97 for the first time in a year.

The declines in US yields and the dollar in April came as evidence mounted that the Federal Reserve would take longer to tighten its monetary strategy than the market expected, according to analysts.

For the euro, the announcement that the European Union has secured an additional 100 million doses of the COVID-19 vaccine produced by BioNTech and Pfizer has been encouraging.

Elsewhere, however, the evolution of the pandemic has aroused distrust among investors.

India reported 1,761 deaths from COVID-19, its highest daily figure, while Canada and the United States extended their land border closure for non-essential travel.

Asian stocks reflected declines on Wall Street, where travel-related stocks weighed on investor sentiment.

Oil fell, dragging commodity currencies with it overnight.

The Canadian dollar was trading at C $ 1.26110 per greenback in Asia, after its biggest drop in nearly two months on Tuesday. The Bank of Canada is scheduled to announce a monetary policy decision on Wednesday.

The Australian dollar, which is a gauge of risk appetite, was down 0.2% to $ 0.77057 after declining 0.4% overnight.

As for cryptocurrencies, Bitcoin was trading around $ 55,500, consolidating after its decline to a low of $ 51,541.16 on Sunday. On April 14 it reached a record of $ 64,895.22.

(Reported by Kevin Buckland; edited by Sam Holmes and Shri Navaratnam; translated by Flora Gómez at the Gdansk newsroom)

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