US dollar hits three-month high on security

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  • Commodity currencies struggle against the US dollar
  • US housing starts data increase
  • Bitcoin drops below $ 30,000 for the first time since June

NEW YORK, July 20 (Reuters) – The US dollar hit a three-month high on Tuesday in a flight-to-safety offer as investors remain concerned about a rapidly spreading coronavirus variant that could dampen global growth .

Commodity-linked currencies linked to risk appetite, such as the Australian and New Zealand dollars, struggled as investors opted for safety or stayed on the sidelines amid renewed fears about the variant Highly contagious Delta, now the dominant coronavirus strain in the world.

Infections in the United States have increased, especially in areas where vaccinations have been delayed. Read more

The dollar rose as yield spreads moved against it. Benchmark 10-year US Treasury yields plunged to a five-month low below 1.20% on Monday amid renewed skepticism about a strong economic rebound from the pandemic.

“Changes in relative growth rate forecasts weaken capital flows from the United States and increase the attractiveness of dollar-denominated investments,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto .

“At the same time, an unwinding of speculative positions requires a short compression of the foreign exchange markets – causing the dollar to rise,” he added.

In afternoon trading, the dollar index, a measure of its value against six major currencies, rose 0.1% to 92.961, after hitting a three-month high of 93.161 earlier in the session.

Data showing US housing starts rose 6.3% to a seasonally adjusted annual rate of 1.643 million units last month had little reaction from the foreign exchange market. Read more

“I think the strengthening of the safe haven of the dollar is deserved, given that global progress has been anemic from what it looked like in the first quarter, so now all valuations and high growth expectations are being put back into place. question rightly so, ”said Juan Perez, FX strategist and trader at Tempus Inc in Washington.

In other currencies, the euro weakened 0.2% to $ 1.1780, after plunging to $ 1.1755, the lowest since early April ahead of a European Central Bank policy decision on Thursday.

The British pound was also among the biggest losers, with the currency falling 0.4% to $ 1.3607, as Boris Johnson’s ‘Freedom Day’ – ending more than a year of lockdown restrictions COVID-19 in England – has been marred by an increase in infections. Read more

The Australian dollar fell to its lowest level since late November and lost 0.2% for the last time to US $ 0.7331.

The Aussie’s losses were widespread, as the minutes of the Reserve Bank of Australia’s policy meeting this month were seen by some economists as a sign that the central bank may reverse its decision to gradually reduce the stimulus. Read more

In cryptocurrencies, bitcoin fell to $ 29,296.39, a level not seen since June 22. It was down 3.4% for the last time to $ 29,779. Rival Ether fell 1.5% to $ 1,789.32.

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Price of currency offers at 2:51 p.m. (1851 GMT)

Reporting by Gertrude Chavez-Dreyfuss; Editing by Dhara Ranasinghe, Alex Richardson and Richard Chang

Our Standards: Thomson Reuters Trust Principles.

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