TOKYO- The dollar sank to an almost twoweek low versus a basket of its peers on Tuesday, moving in tandem with retreating Treasury yields from recent peaks despite signs of a robust US economic recovery.
The dollar index wallowed at its lowest level since March 25, slipping further in early Asian trading following a 0.4 percent decline on Monday.
The softer turn comes after it hit an almost five-month peak on Wednesday of last week.
The yen continued to recover from a more than one-year low near 111 per dollar, briefly strengthening back below 109 on Tuesday. The euro extended its rise from a nearly five-month trough close to $1.17 to trade as high as $1.1821.
The Australian dollar, considered a proxy for risk appetite, edged higher to $0.7657 after rallying 0.8 percent to start the week. The Reserve Bank of Australia will announce a policy decision later on Tuesday, with no change expected.
The greenback has risen strongly this year, along with Treasury yields, as investors bet on a faster US pandemic rebound than other developed nations amid massive stimulus and aggressive vaccinations.
But the dollar’s drop this week even after Friday’s much-stronger-than-expected monthly payrolls data was followed on Monday by the highest reading for services industry activity on record may indicate that much of the bullish outlook is priced in for now.
“While the US does look exceptional, COVID normalization over time means the rest of the world will converge,” Mark McCormick, the global head of foreign-exchange strategy at TD Securities, wrote in a client note.