Dollar near 3-1/2 week lows; commodity currencies stand tall

2017 12 27T092938Z 1 LYNXMPEDBQ0ER RTROPTP 0 GLOBAL FOREX 1 150x150 - Dollar near 3-1/2 week lows; commodity currencies stand tall

FILE PHOTO:  A packet  of Lincoln five dollar bills is inspected at the Bureau of Engraving and Printing in Washington
FILE PHOTO: A packet of former U.S. President Abraham Lincoln five-dollar bill currency is inspected at the Bureau of Engraving and Printing in Washington March 26, 2015. REUTERS/Gary Cameron/File Photo

December 28, 2017

By Masayuki Kitano

SINGAPORE (Reuters) – The dollar was on the defensive on Thursday, facing headwinds from a dip in U.S. 10-year bond yields, while commodity-linked currencies were bolstered by this week’s rally in metal and oil prices.

The dollar’s index against a basket of six major currencies last stood at 92.980 <.DXY>, languishing near Wednesday’s trough of 92.956, its weakest level since Dec. 1.

“Bond yields have pulled back from their peaks and the dollar is trading with a soft tone,” said Satoshi Okagawa, senior global markets analyst at Sumitomo Mitsui Banking Corporation in Singapore, referring to a pullback in U.S. 10-year Treasury yields.

The U.S. 10-year Treasury yield stood near 2.42 percent <US10YT=RR>, having come off a nine-month high of 2.504 percent set last week. The U.S. 10-year yield had slipped on Wednesday as investors rebalanced portfolios before year-end.

The euro edged up 0.1 percent to $1.1902 <EUR=>, having set a 3-1/2 week high of $1.1911 on Wednesday.

Against the yen, the dollar eased 0.2 percent to 113.19 yen <JPY=>, staying below a four-week high of 113.75 yen touched on Dec. 12.

Currencies of commodities exporters remained firm, in the wake of this week’s rise in oil prices <LCOc1> to 2-1/2 year highs and a surge in copper prices <CMCU3> to four-year peaks.

The Australian dollar touched a fresh two-month high of $0.7780 <AUD=D3> on Thursday, having gained 0.8 percent so far this week.

The Canadian dollar <CAD=D3> last stood at C$1.2639. On Wednesday, the loonie had touched a three-week high of C$1.2627.

A rise to levels beyond its early December high of C$1.2624 would send the Canadian dollar to its highest since late October.

(Reporting by Masayuki Kitano; Editing by Sam Holmes)

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