NEW YORK, July 10 — The dollar edged lower yesterday, along with the Japanese yen, as riskier currencies were favoured, with the rally in US Treasuries running out of steam and global stock markets steadying.

Some recent soft US data, along with a surge in Covid-19 cases in many parts of the world, has fuelled concerns that the global economic recovery was running out of steam, leading to an eight-day streak of declines for the 10-year Treasury yield that ended yesterday.

“This week was all about the bond market and the collapse in treasury yields,” said Edward Moya, senior market analyst for the Americas at OANDA. “Some of that move was probably overdone.”

The rise in yields supported riskier assets and currencies, with global stock markets rising and the commodity-linked Australian and New Zealand dollars catching a bid.

The Aussie rose 0.79 per cent to US$0.74905 (RM3.14), after earlier touching a fresh low for the year at US$0.7410, and the kiwi added 0.81 per cent to US$0.7002, having plunged more than 1 per cent in the previous session.

The euro extended gains on top of a 0.45 per cent jump on Thursday, rising 0.27 per cent to US$1.1876.

The dollar index slid 0.252 per cent to 92.131.  

The greenback’s decline was likely due in part to profit-taking ahead of key US inflation data for June due next week, said Joe Manimbo, senior market analyst at Western Union Business Solutions.

“Dollar bulls are just pulling some chips off the table,” he said.

The yen, perceived as a safe-haven currency, declined as risk appetite began to recover.

“Yesterday’s decline in dollar-yen is reversing together with risk appetite in equities suggesting no wider spillover effects across markets for now — the same move is seen in the US 10-year yield bouncing back above 1.3 per cent,” said Steen Jakobsen, chief investment officer at Saxo Bank.

The yen eased 0.39 per cent to 110.185, giving back some of its gains against the greenback from Thursday, when it had its biggest daily rise since November.

The Canadian dollar strengthened 0.61 per cent against the US dollar to US$1.2453 as oil prices rose and data showed Canada added more jobs than expected in June as public health restrictions were eased in several regions of the country.

Elsewhere, the People’s Bank of China said it would cut the reserve requirement ratio (RRR) — the percentage of deposits lenders must hold on to — for all banks by 50 basis points, effective from July 15, helping spur the move back into riskier assets.

“We’re probably going to see some further momentum from this RRR cut and I think we’ll probably see some follow-through once Asia opens on Sunday,” said OANDA’s Moya.

Looking forward, US retail sales numbers for June are also due next week, along with US bank earnings.

Adding to the busy week ahead, US Federal Reserve Chair Jerome Powell is scheduled to appear before Congress, and rate decisions by central banks in Japan, Canada and New Zealand are on tap. — Reuters