SINGAPORE- The dollar was smarting on Tuesday following its sharpest one-day fall since May, though traders were wary of chasing the mood-driven move lower ahead of a Federal Reserve symposium that could map out an end to stimulus and asset purchases.
The greenback dropped more than 1 percent against the Australian dollar, Norwegian crown, Swedish crown and Canadian dollar overnight and fell by almost that much against the kiwi as markets focused on positive COVID news and stocks jumped higher.
The euro rose 0.4 percent to $1.1745. The US dollar index fell just over 0.5 percent to a one-week low of 92.994, busting through an uptrend that had been gaining momentum and lifted the index by 1 percent last week.
“A positive risk backdrop has pushed flows out of the dollar,” said Chris Weston, head of research at brokerage Pepperstone in Melbourne, who said positive analyst commentary around oil and cyclical stocks had also helped the broad mood.
“But I wouldn’t be going short dollars just because of this…it could easily flip up going in to Jackson Hole,” he added, referring to the Fed’s Friday symposium.
Further moves were slight early in the Asia session, leaving the Aussie steady at $0.7280, the kiwi at $0.6888 and sterling at $1.3720.
The Japanese yen and Swiss franc both rose above their 20-day moving averages as the dollar weakened, leaving the yen at 109.70 per dollar and the franc at 0.9123 per dollar.
Data overnight showed strong, but slowing services and manufacturing activity in Europe while business activity growth in the United States slowed for a third straight month as the spread of the Delta virus variant took a toll.
