TOKYO- The dollar fell toward multi-year lows against most major currencies on Tuesday as the Federal Reserve’s new policy framework continued to fuel bets that US rates will stay lower for longer than other countries.
The Australian dollar held around a two-year high against the greenback as traders wait for news from a Reserve Bank of Australia (RBA) policy meeting later on Tuesday to gauge policymakers’ views on the economy.
The yen was hemmed into a narrow range as politicians jockeyed to choose a new premier following Prime Minister Shinzo Abe’s shock resignation last week.
The US data calendar this week is full of important releases on manufacturing, durable goods, and employment, but positive results are unlikely to halt the dollar’s decline due to strong expectations that rates will remain extremely low.
“The dollar is weak not only against G10 currencies but also against emerging market currencies,” said Minori Uchida, head of global market research at MUFG Bank in Tokyo.
“This shows the dollar is in a downtrend that will last for some time. Low rates and an excess supply of dollars are driving this move.”
Against the euro, the dollar fell to $1.1973 on Tuesday in Asia to reach its lowest since May 2018.
The British pound rose to $1.3402, the highest since December last year, after Japan’s foreign minister said a broad agreement on a Japan-UK trade deal is close.