The U.S. dollar was mired at a three-week low on Tuesday as growing optimism about the outlook of the global economy in the coming months sent investors scurrying to purchase riskier currencies including the euro, crown and the British pound.
Against a basket of its rivals, the greenback steadied at 90.229, its lowest level since Jan. 27. It has fallen nearly 1.5% over the past eight trading sessions.
“The positive outlook for the major economies continues to support financial market sentiment thanks to sharp gains in crude oil prices and optimism over better growth ahead due to the impressive roll-out of COVID vaccines,” MUFG strategists said.
The latest U.S. dollar weakness was more noticeable as it was against a broader backdrop of rising U.S. Treasury yields, a factor that was previously supportive of the greenback.
The buoyant mood also dragged on the safe-haven Japanese yen , which fell through its 200-day moving average against the dollar and struck multi-year lows against the euro, Aussie and Swiss franc.
Sterling, extended gains to hit $1.3946, its highest level since April 2018 as Britain leads the world in per-capita vaccination speed. The currency has gained almost 3% from early-February lows.
“Things right now reflect greater comfort with the story of a synchronised global recovery, which is why we are seeing a weaker dollar,” said Bank of Singapore currency analyst Moh Siong Sim.
The euro crept 0.2% higher to $1.2150 to re-test recent resistance at that level. Rising oil prices lifted the Canadian dollar and Norwegian crown to multi-week highs.
The Chinese yuan slipped 0.1% to 6.4132 per dollar after the Financial Times reported Beijing was exploring curbs on rare earth mineral exports in order to hurt the U.S. firms that use them.
The dollar traded near milestone lows against other currencies. The risk-sensitive Australian dollar hit a one-month high of $0.7802 and the kiwi made a five-week peak of $0.7257.
Reporting by Saikat Chatterjee; Additional reporting by Tom Westbrook in Singapore; Editing by Alison Williams