© Reuters. FILE PHOTO: US $ 100 bills are featured in this image illustration
By Stanley White
TOKYO (Reuters) – The dollar fell to a three-year lows against the British pound, causing losses against commodity currencies on Wednesday as investors began to bet that a global economic rebound will boost riskier assets.
The New Zealand dollar was in focus ahead of a central bank meeting that could hit the higher levels if policymakers make positive comments about the local economy.
Federal Reserve Chairman Jerome Powell reiterated Tuesday that interest rates will remain low and that the Fed will continue to buy bonds to support the US economy, which many traders believe is a long-term negative for the dollar.
At the same time, more money is flowing into currencies that are expected to benefit from a revival in world trade and into countries that are rapidly recovering from the coronavirus pandemic, which is also weighing on the dollar.
“Signs of an economic recovery are rising commodity prices, which in turn supports the currencies of commodity exporters,” said Junichi Ishikawa, foreign exchange strategist at IG Securities.
“The appetite for risk has improved a lot, which puts the dollar at a disadvantage.”
The Australian dollar, which tends to benefit from rising metal and energy prices, was trading near a three-year high.
The British pound rose to $ 1.4120, its highest level since April 2018.
The outlook for sterling has brightened as investors cheered the UK’s coronavirus vaccination program and its plans to ease lockdown restrictions on economic activity.
Against the euro, the dollar was quoted at USD 1.2153, close to a six-week low.
The dollar was stable at 105.29 Japanese yen.
Powell pushed back against proposals that loose monetary policy could lead to runaway inflation and financial bubbles, which have emerged as two major themes this year as skepticism about the rapid growth of global stocks grows.
For economies with limited disruption caused by the coronavirus outbreak, their central bankers are now faced with a question of when to start tightening policies, which makes the dollar look less attractive, some analysts say.
The Reserve Bank of New Zealand is expected to keep its policies on hold on Tuesday, but three economists in a Reuters poll expect a rate hike by the end of next year amid a faster-than-expected economic recovery.
Prior to the decision, the New Zealand dollar remained stable at $ 0.7338, approaching a three-year high.
Bid prices at 0012 GMT
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
Euro / Dollar $ 1.2153 $ 1.2150 + 0.02% -0.53% +1.2155 +1.2143
Dollar / Yen 105.2950 105.2600 + 0.05% + 1.96% + 105.3250 + 105.2400
Euro / Yen 127.96 127.86 + 0.08% + 0.82% + 127.9800 + 127.7800
Dollar / Swiss 0.9054 0.9054 + 0.02% + 2.36% + 0.9056 + 0.9048
Pound sterling / dollar 1.4118 1.4112 + 0.05% + 3.35% + 1.4122 + 1.4111
Dollars / Canadians 1.2589 1.2590 + 0.03% -1.10% +1.2596 +1.2583
Aussie / dollar 0.7908 0.7909 -0.03% + 2.79% +0.7915 +0.7903
NZ 0.7338 0.7343 -0.05% + 2.20% +0.7343 +0.7334
Dollar / dollar
Tokyo Forex Market Information from BOJ