US Dollar Falls Monday Afternoon from Morning Highs

US Dollar Falls Monday Afternoon from Morning Highs

The dollar advanced earlier Monday before retreating later in the day on lower Treasury yields after the US airstrikes overnight, with dollar index slipping to 91.82 after a morning high of 92.01.

Two measures of April home prices and the Conference Board’s measure of consumer confidence for June are due on Tuesday.

Foreign exchange action shows that EUR-USD fell to one-week lows of 1.1902 at the US open, subsequently rallying to 1.1940 highs in late morning trade.

Lower stock prices increased demand for Treasuries, trimming yields, after US airstrikes in Syria and Iraq. Upside in the pair will be capped by reports of COVID-19 infections from the delta variant.

US Dollar Falls Monday Afternoon from Morning Highs
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GBP-USD rallied to 1.3940 highs in London morning trade, up from Asian lows of 1.3877. The US session saw a 1.3927 high, though the pairing faded to 1.3882 into the London close.

Comments from the new UK Health Secretary that the economy should be able to proceed with full reopening on July 19, combined with expectations of strong UK data in the coming weeks lifted the pound.

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USD-JPY was capped ahead of the 111.00 mark, which has proved to be a resistance level over the past week. The pairing has since pulled back to 110.50, as risk taking diminished and the US 10-year yield pulled back, both positive for the yen.

USD-CAD rallied from overnight lows of 1.2289 to 1.2346 one-week highs at mid-day North American trade, with oil prices slipping from their recent peak in overnight trading.

In a related development, the Federal Reserve vice Chair Quarles praises stablecoins, says it could support dollar’s global role

Randal Quarles, the US Federal Reserve’s Vice Chair for Supervision, expressed his support for stablecoin at the Annual Utah Bankers Association Convention.

“We do not need to fear stablecoins,” Quarles said. “I believe that we must take strong account of the potential benefits of stablecoins, including the possibility that a US dollar stablecoin might support the role of the dollar in the global economy.

“For example, a global US dollar stablecoin network could encourage use of the dollar by making cross-border payments faster and cheaper, and it potentially could be deployed much faster and with fewer downsides than a [central bank digital currency].”

Regarding central bank digital currencies, Quarles said that “the recent clamor over CBDCs makes it appropriate to explore the benefits, costs, and practicalities of implementing one in the United States,” provided that the necessary legislative authority is granted.

US Dollar Falls Monday Afternoon from Morning Highs

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