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FOREX-Dollar slides on improving European, U.K. economic outlooks, commodities bounce

David Henry
·4 min read

(Revises, updates prices.) * Dollar index falls again * Euro back to January levels against dollar * Australian dollar makes three-year peak * Sterling near three-year highs as lockdown end comes in view * Bitcoin pares losses of as much as 16% * Graphic: World FX rates https://tmsnrt.rs/2RBWI5E By David Henry NEW YORK, Feb 22 (Reuters) - The U.S. dollar resumed its slide on Monday and reached multi-year lowsagainst the British pound and the Australian dollar as traders focused on the promise of coronavirusvaccinations and the outlooks for economic growth and inflation that could push bond yields higher. The U.S. dollar index was last down 0.3% in afternoon trading in New York at 90.046 and abouteven for the year. The dollar has been trending down in February and has now given up about all of itsJanuary recovery from a 2020 decline of nearly 7%. The dollar's latest retreat comes with spreading belief that the U.S. will go farther than necessary tosupport the economy with government spending and easy money policies and end up with too much inflation andtoo much additional debt. Looking for any sign that the U.S. Federal Reserve might become less dovish and more mindful ofinflation, markets will be watching testimony on Tuesday from Federal Reserve Chair Jerome Powell to theSenate Banking Committee. The dollar's downtrend has come as the benchmark yield on 10-year Treasury notes has climbed to 1.37%from 1.1% at end of January. The 10-year yield was relatively steady in trading on Monday in advance ofPowell's testimony, which will go into a second day on Wednesday before another committee. "The dollar continues to wax and wane with U.S. data that have painted a mixed picture of the world’sbiggest economy," Joe Manimbo, senior market analyst at Western Union Business Solutions, said in a note onMonday. Weakness in U.S. employment has been undermining dollar rallies as markets see wavering jobs datareinforcing the Federal Reserve's commitment to low interest rates, Manimbo added. The euro rose 0.4% against the dollar to $1.2162. Data on Monday showed German business moralerose more than expected in February due notably to the country's resilient industrial sector. Exchange rates between the euro and dollar will depend "on whether the U.S. economy really will be ableto achieve a stronger post-lockdown boom than Europe," Commerzbank analyst Ulrich Leuchtmann said. The British pound was last up 0.5% to $1.4066 and the highest levels since April 2018 as PrimeMinister Boris Johnson announced a path out of lockdowns on the UK's relative success providing COVID-19vaccinations. "We've clearly started to price in a lot of good news," said Ned Rumpeltin, head of European currencystrategy at TD Securities. The U.S. dollar fell to three-year lows against the Australian dollar, which benefits from risingcommodity prices. The Aussie was last up to $0.7917, at its highest levels since March 2018. "Commodity currencies and the pound are particularly strong against the dollar, and this trend looks setto continue," said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities. Australia on Monday began its mass COVID-19 vaccine programme as the country looked set to report nolocal cases for the third straight day, which gave the Aussie a boost. Bitcoin fell 6% on Monday to $53,866 after surging to a record high of $58,354 a day earlier.The cryptocurrency pared losses as fallling as much as 16% on Monday and going as low as $47,400. ======================================================== Currency bid prices at 3:12PM (2012 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 90.0460 90.2910 -0.27% 0.072% +90.5780 +89.9900 Euro/Dollar $1.2162 $1.2118 +0.36% -0.46% +$1.2170 +$1.2092 Dollar/Yen 105.0550 105.4900 -0.42% +1.70% +105.8400 +105.0000 Euro/Yen 127.78 127.75 +0.02% +0.68% +128.2400 +127.5100 Dollar/Swiss 0.8959 0.8965 -0.06% +1.27% +0.9023 +0.8949 Sterling/Dollar $1.4066 $1.4001 +0.47% +2.96% +$1.4085 +$1.3980 Dollar/Canadian 1.2608 1.2619 -0.08% -0.98% +1.2653 +1.2581 Aussie/Dollar $0.7917 $0.7868 +0.64% +2.93% +$0.7929 +$0.7855 Euro/Swiss 1.0895 1.0859 +0.33% +0.81% +1.0915 +1.0863 Euro/Sterling 0.8645 0.8645 +0.00% -3.27% +0.8660 +0.8634 NZ $0.7328 $0.7297 +0.44% +2.06% +$0.7343 +$0.7282 Dollar/Dollar Dollar/Norway 8.4870 8.4760 +0.05% -1.24% +8.5375 +8.4370 Euro/Norway 10.3252 10.2642 +0.59% -1.35% +10.3299 +10.2173 Dollar/Sweden 8.2680 8.2786 +0.36% +0.87% +8.3080 +8.2526 Euro/Sweden 10.0559 10.0195 +0.36% -0.20% +10.0641 +10.0135 (Reporting by David Henry in New York and Julien Ponthus in LondonAdditional reporting by Stanley White in TokyoEditing by Paul Simao and Chizu Nomiyama)