TOKYO- The dollar was on the back foot against the safe-haven yen and Swiss franc on Tuesday after soft US manufacturing data and rising concerns about the coronavirus Delta variant prompted traders to wind back bets on a strong economic recovery.
The dollar traded at 109.34 yen near its July 19 low of 109.07, which was its lowest level since late May. Against the Swiss franc, the dollar traded at 0.9054 franc having hit a 1-1/2-month low of 0.9038 in the previous session.
The euro was subdued at $1.1873 having lost a bit of momentum after hitting a one-month high of $1.1909 on Friday while sterling slipped to $1.3889 from Friday’s one-month high of $1.39835.
“The market is moderately risk-off with bond yields falling off a bit since European trade yesterday. There is some caution as the Delta variant is spreading in many places, even in China,” said Yukio Ishizuki, senior strategist at Daiwa Securities.
The US yield dropped on Monday shortly after an Institute for Supply Management (ISM) report showed July US manufacturing growth slowed for the second straight month.
“From a historic perspective a 59.5 manufacturing ISM reading is still a very robust activity reading. Nevertheless reaction to the data release by the US Treasuries market suggests the market is concerned over ‘peak growth’ and the potential for more slowdown ahead,” wrote Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney. – Reuters
