Dollar gives in to gravity and drops as U.S. yields extend fall

Dollar gives in to gravity and drops as U.S. yields extend fall

The dollar gave in to gravity on Monday and pulled further away from near 14-year highs as U.S. Treasury yields eased from recent peaks, Reuters reports.

 

After rallying without pause for much of the month, the dollar index against a basket of major currencies .DXY shed 0.7 percent to 100.77, adding to Friday's losses.

 

It had popped above 102.00 on Thursday, its highest since March 2003.

 

The greenback underperformed against the safe-haven yen in the wake of a broader ebb in risk appetite as the Nikkei .N225 and crude oil prices fell.

 

The greenback had slipped late last week as investors took advantage of a pullback in U.S. bond yields and a holiday-shortened week to consolidate gains.

 

The 10-year Treasury note yield US10YT=RR declined further on Monday to 2.326 percent after rising to a 16-month high of 2.417 percent on Thursday.

 

The U.S. currency was down 1.3 percent at 111.650 yen JPY= following a rise to an 8-month high of 113.900 last week. The euro EUR= was up 0.9 percent at $1.0667 after stooping to an 8-month trough of $1.0518 on Thursday.

 

"The dollar has run out of lift as Treasuries are settling down after Thanksgiving, and before hedge funds' earnings releases and events due to take place towards the weekend," said Koji Fukaya, president at FPG Securities in Tokyo.

 

"When the dollar's rise stops, it's time for domestic players like exporters to sell," he added.

 

The dollar has surged virtually without a rest since Republican Donald Trump was elected president earlier this month, triggering a spike in Treasury yields on heightened expectations of enlarged fiscal spending and inflation.

 

The dollar could face some resistance this week ahead of potentially risk-laden events such as the midweek Organization of the Petroleum Exporting Countries (OPEC) meeting and Italy's Dec. 4 referendum on constitutional reform.

 

Crude oil has slumped amid uncertainty over whether OPEC would reach an output deal. Italy's referendum could rattle financial markets by prompting the country's government to resign.