On Tuesday, the dollar soared near a three-week high. It was after prospects of policymakers around the world releasing fresh stimulus drove an improvement in appetite for riskier assets.
The U.S. government bond yields were also lifted.
Yields on benchmark U.S. Treasuries pulled away from three-year lows.
They were helped in part by the outlook of Germany dumping its balanced budget rule to bolster spending and on more economic support measures by China.
China’s yuan weakened 0.2% at 7.0661 per dollar in onshore trade versus the broadly firmer greenback.
Meanwhile, after the People’s Bank of China (PBOC) set its new lending rate slightly lower, the yuan was also modestly pressured.
It was the first publication of the benchmark since the PBOC declared interest rate reorganizations over the weekend. They are designed to lower corporate borrowing costs.
A senior currency strategist at Daiwa Securities, Yukio Ishizuki, said, “The dollar is higher across the board, tracking the rebound in yields.”
In addition, “The prospect of Germany embarking on stimulus was the turning point and the dollar has regained momentum since.”
Other Updates in the Forex Market Movement
The greenback moved a little and traded at 106.580 yen following three straight sessions of gains.
It is moving away from a seven-month low near 105.000 reached last week.
A currency against the Swiss franc was wanted in times of market chaos and political tensions along with the yen.
Meanwhile, the dollar held nearly a two-week high of 0.9820 franc that mounted overnight.
The euro strengthened at $1.1086. But on Friday, it still held close to a two-week trough of $1.1066 set enduring concerns over political developments in Italy.
Italy’s opposition Democratic Party had good initial links with the ruling 5-Star Movement.
On Monday, a source with an idea of the talks said, this has to do over the opportunity of faking a coalition.
The 5-Star’s current coalition partner, the far-right League, has indicated it will cite a no-confidence motion versus Prime Minister Giuseppe Conte.
This is with in an attempt to generate a snap election and cash in, on its rolling popularity in the surveys.
A chief forex strategist at Mizuho Securities, Masafumi Yamamoto said, “The political situation in Italy remains unstable.”
Lastly, he also said, “This is in addition, expectations of Germany embarking on fiscal stimulus may in turn also heighten Italian fiscal concerns.”