TOKYO, Oct 19 (Reuters) - The safe-haven dollar slid to a
three-week low versus major peers on Tuesday amid improved risk
sentiment as Asian equities followed U.S. tech shares higher,
and on signals China's property market woes will be contained.
The risk-senstive Aussie dollar jumped, along with the
The dollar index, which measures the greenback
against six peers, sank as low as 93.641 for the first time
since Sept. 28, breaking below its recent range. It was last
0.26% lower at 93.690.
An index of Asia-Pacific shares advanced
about 1%, led by a rally in tech stocks. Chinese blue chips
also jumped about 1%.
Fears about contagion from property giant China Evergrande's
debt troubles receded after some of its peers made bond coupon
payments this week, and policymakers said late last week that
the situation was controllable.
The onshore yuan jumped as high as 6.4105 per
dollar, the strongest since June 16, while in offshore trading
it reached 6.3975, also the highest since June 16.
The Aussie rose as high as $0.7474 for the first
time since Sept. 3, even after minutes of the Reserve Bank of
Australia's September meeting showed that policymakers are
concerned monetary tightening could harm the labour market.
Just a week ago, the dollar index reached a one-year high of
94.563 as fears of stagflation drove investors to safe havens,
as well as on bets the Federal Reserve would begin tapering its
monetary stimulus as soon as next month, followed by interest
rate increases next year.
With Fed tightening bets already priced in, the market is
now raising wagers for policy normalisation elsewhere, with Bank
of England (BoE) Governor Andrew Bailey saying on Sunday the
central bank would have to act to counter rising inflation
risks, while data in New Zealand on Monday showed the fastest
consumer-price inflation in more than a decade.
Britain and New Zealand led a rise in short-term bond yields
globally overnight, with rates in Europe and Australia climbing
comparatively more than those in the United States, pressuring
"We still consider USD can resume its uptrend," Commonwealth
Bank of Australia strategist Kim Mundy wrote in a client note.
"Medium-term inflation pressures are building in the U.S.
and as a result, we expect U.S. Fed Funds futures to start
pricing a more aggressive rate hike cycle."
Sterling rose as high as $1.3778 for the first time
since Sept. 17.
The euro advanced as far as $1.1658, a level not
seen since Sept. 29.
Even against the safe-haven yen, the dollar
retreated 0.3% to 113.975, further falling back from the almost
three-year high of 114.47 touched on Friday.
The New Zealand dollar rose as high as $0.7149 for
the first time since Sept. 14.
Investors will have a chance to hear from a range of central
bank officials on Tuesday, including BoE governor Bailey, Bank
of Finland governor Olli Rehn, European Central Bank chief
economist Philip Lane, and Fed governor Christopher Waller.
"The sense that 'transitory' inflation will last longer than
previously thought has been the main catalyst" for moves in
global yields, as "the market re-calibrated rate hike
expectations in most jurisdictions," Westpac strategists wrote
in a research note.
However, the United States is likely to be insulated from
the energy market bottleneck that is "casting an ongoing cloud
over rebound prospects in Europe and China," and that "should
leave yield spreads at the front end continuing to drift in the
USD's favour," they said, adding that pullbacks in the dollar
index should be limited to 93.70.
Still, Westpac remains bullish on New Zealand's kiwi dollar
- which isn't part of the dollar index - targeting a climb to
$0.74 by year-end, and recommending buying any dips to $0.6985.
In cryptocurrencies, bitcoin rose as high as
$62,991.93 for the first time since mid-April, closing in on the
all-time high of $64,895.22 reached that same month.
(Reporting by Kevin Buckland
Editing by Shri Navaratnam and Mark Potter)