The dollar slid broadly on Thursday, hampered by a recent dip in US 10-year bond yields, while commodity-linked currencies were bolstered by this week's rally in metals and oil prices. In the cryptocurrency market, bitcoin came under renewed pressure, tumbling by as much as 10.8 per cent on the Luxembourg-based Bitstamp exchange.
The dollar's index against a basket of six major currencies slipped to as low as 92.734, its weakest level in almost four weeks. The index has dropped more than 9 per cent this year, putting it on track for its biggest annual slide since 2003.
“Bond yields have pulled back from their peaks and the dollar is trading with a soft tone,” said Satoshi Okagawa, senior global markets analyst at Sumitomo Mitsui Banking Corporation in Singapore, referring to a pullback in US 10-year Treasury yields.
The US 10-year Treasury yield stood at 2.425 per cent on Thursday, having come off a nine-month high of 2.504 per cent set last week. The euro rose 0.4 per cent to $1.1929. The single currency has gained more than 13 per cent so far this year, well on the way for its best annual performance since 2003. Against the yen, the dollar slid 0.5 percent to 112.78 yen .
This week's drop in the dollar probably partly reflects a sell-the-fact type of reaction after US President Donald Trump had signed US tax reforms into law last week, said Lee Jin Yang, macro research analyst for Aberdeen Standard Investments in Singapore.
“I think people have been long dollars into the (Fed's December) rate hike, into the passage of the tax bill, and right now people are just pulling back,” Lee said, referring to short-term market positioning.
Commodity currencies
Currencies of commodities exporters remained firm, in the wake of this week's rise in oil prices to 2-1/2 year highs and a surge in copper prices to four-year peaks. The Australian dollar touched a two-month high of $0.7799 on Thursday, having gained more than 1 per cent so far this week. The Canadian dollar also touched a two-month peak of C$1.2613 per US dollar.
Bitcoin, the biggest and best-known digital currency, was last down 8.9 per cent on the day at around $14,000 on the Luxembourg-based Bitstamp exchange. Earlier on Thursday, South Korea's government had said it will impose additional measures to regulate speculation in cryptocurrency trading in the nation, where bitcoin has drawn wide participation from housewives and students.