US dollar climbs to 9-month peak on Fed taper view, Delta virus

[NEW YORK/LONDON The US dollar advanced to a nine-month high on Thursday, as worries about widespread coronavirus infections and Federal Reserve meeting minutes showing policymakers considering reducing pandemic-era stimulus this year hit global stocks and commodity-linked currencies.

The US dollar index, which measures its performance against six currencies, hit 93.434, its highest since early November last year. It was last up 0.2 per cent at 93.273.

"The US dollar is broadly stronger today against the non-haven currencies with a strong risk-off tone in markets that are roiled by the spread by the Delta variant," Shaun Osborne, chief FX strategist at Scotiabank in Toronto, wrote in a research note.

"Preparations for the beginning of the Fed's tapering cycle may also not be helping," he added.

The minutes of the Fed's July meeting showed officials largely expect to reduce their monthly bond buying later this year, but consensus on other key issues appeared elusive, including the timing of the start of the taper and whether inflation, joblessness or the coronavirus pose a bigger risk to economic recovery.

The Fed minutes, along with sustained worries about the spread of the coronavirus, pushed Wall Street stock indexes lower. European markets were down as well on Thursday, while safe-haven US Treasuries gained, with benchmark 10-year yields nearly three basis points lower at 1.246 per cent.

The US dollar hardly reacted to data showing weekly unemployment claims showed the number of people on state jobless rolls dropped in early August to levels last seen in mid-March 2020.

The euro fell as low as US$1.1665 against the greenback for the first time since Nov 4 and was last down 0.1 per cent at US$1.1699, while sterling fell 0.7 per cent to US$1.3679.

REUTERS