Dollar pares gains after hitting four-month high as risk appetite wanes

New York (Reuters) – The U.S. dollar reached a fresh four-month high before slashing its gains on Thursday, as yields on U.S. Treasuries dipped and investors’ appetite for risk shrunk.

FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul February 7, 2011. REUTERS/Lee Jae-Won/File Photo

The dollar index was mostly unchanged at 92.6410 in mid-morning trading.

Yields on Treasuries crept down and stocks fell, with 10-year notes yielding 1.598 ahead of an auction on shorter-dated bonds on Thursday. Investors were shrugging off positive U.S. economic data showing that fewer-than-expected Americans filed new claims for unemployment benefits last week.

“There’s some nervousness around positioning, some paring down of positions within the foreign exchange market,” said Mazen Issa, senior currency analyst at TD Securities, adding that some technical developments have also kept the dollar on a “bit of a roll.”

U.S. stocks opened lower in a session marked by choppy trading.

Concerns about extended lockdowns in Europe also weighed on markets. German Chancellor Angela Merkel’s decision to ditch plans for a lockdown over Easter did little to improve sentiment.

The euro was down 0.12% against the dollar, at $1.1800, with analysts forecasting it could embrace the $1.16 range, as Europe’s economic recovery from the pandemic lags.

The Australian and New Zealand dollars, which dropped in the previous two sessions, edged back up slightly against the U.S. dollar, but both were only up by around 0.1% on the day overall.

On Wednesday, U.S. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell expressed their confidence in the U.S. recovery during a second day of testimony to Congress.

European leaders meet on Thursday and will discuss vaccine supplies.

The EU on Wednesday tightened its oversight of coronavirus vaccine exports, giving it greater scope to block shipments to countries with higher inoculation rates such as Britain.

Bitcoin extended recent losses, down 1.43% at $51,535.69 .

The cryptocurrency briefly topped $57,000 in the previous session after Tesla Inc boss Elon Musk said customers can now buy the company’s electric cars with the digital token.

Graphic: USD –

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