TOKYO- The dollar was buoyant on Tuesday, pushing the euro to a four-month low, as a run of strong US job figures solidified expectations the US Federal Reserve could soon start tapering its massive coronavirus-driven stimulus.
The prospect of the Fed’s reduced bond-buying pushed down US bond prices, lifting their yields and hitting other safe-haven assets that had benefited from low returns from US debt, such as the Swiss franc and gold.
The Swiss franc has lost about 1.6 percent over the last two sessions against the dollar to trade at 0.9196 franc to the dollar.
The franc weakened even against the single currency to 1.08045 per euro, reversing its rise earlier this month to a nine-month high of 1.0720.
Gold licked its wounds at $1,736.5 per ounce having lost 4 percent in the last two sessions and briefly falling to as low as $1,667.6 on Monday, its weakest since April 2020.
The euro slipped to a four-month low of $1.1732 and last stood at $1.1739.
“The market is repricing the Fed’s tapering. It has only begun and I expect market adjustment to continue. The market will likely test the euro’s low so far this year (of $1.1704 marked on March 31),” said Jun Arachi, senior strategist at Rakuten Securities.
The dollar’s broad rally came as US Treasury yields spiked to three-week highs as surprising strong job openings on top of better-than-expected employment gains in July added to the narrative of an improving labor market.
Job openings, a measure of labor demand, shot up by 590,000 to a record-high 10.1 million on the last day of June, the US Labor Department reported in its monthly Job Openings and Labor Turnover Survey (JOLTS).
