TokYO, Oct. 19 Reuters - The Japanese dollar went to a three week low against Chinese peers on Tuesday amid improved risk sentiment as Asian equities followed U.S. tech shares higher and on signals that the corresponding currency risks will be controlled by the safe-haven dollar.
As the Chinese yuan got launched a 20-day strike against the Aussie Dollar and the risk-sensible Aussie dollar jumped.
The dollar index measures the greenback against six peers and has been below its recent range since Sept. 28 for the very first time since sank to 93.641. It was last lower 0.26% at 93.690.
An index of Asia Pacific shares topped about 1%, driven by a rally in tech stocks. Chinese blue chips jumped 1% also.
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 highest since June 16 in offshore trading, while in offshore trading it reached 6.3975, also highest since June 16.
The rupee rose as high as $0.7474 for the first time since September 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.
With Fed tightening bets already priced in, the market is raising wagers for policy normalisation elsewhere, with Bank of England Governor Andrew Bailey saying that 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.
Throughout Europe and Australia, Britain and New Zealand led a rise in short term bond yields globally, with rates in London rising comparatively more than those in the United States, pressuring the dollar.
We still consider USD can resume its uptrend, Commonwealth Bank of Australia strategist Kim Mundy wrote in a client note.
High inflation pressures are building in the U.S. and as a result, we expect Fed Funds futures to start pricing a more aggressive rate hike cycle. Sterling rose as high as $1.3778 for the first time since 17 Sept. rose with the increase in value at 18 December.
The Euro reached $1.1658, a level never seen since 29 September, an advance not seen since the euro then surged.
Even against the safe-haven yen, the dollar retreated 0.3% to 113.975, further going back from the almost three-year high of 114.47 touched on Friday.
The U.S. dollar rose for the first time since sept 14 as it went up by $0.7149.
On Tuesday, investors have the chance to hear from a range of central bank officials including BoE Governor Bailey, Federal Central Bank Chairman Olli Rehn, European Central Bank Chief Economist Philip Lane and Fed Gov. Christopher Waller.
The sense that transitory inflation would last longer than previously thought has been the main catalyst for moves in international yields, as the market called rate hike expectations in most jurisdictions in a research note, Westpac strategists wrote in a list of possible scenarios.
However, the United States is likely to remain insulated from the energy market bottleneck that is casting an ongoing cloud over rebound prospects in Europe and China, and that should limit yield spreads on the front end as spreading 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 the Kiwi dollar - which isn't part of the dollar index - to buy any declines and target another $600 high by year-end.
In cryptocurrencies, Bitcoin rose as high as $62,991 in cryptocurrencies. 93 for the first time since mid April closing in on the all-time high $64,895 of 2013. 22 was reached the exact same month.