The dollar remained under pressure on Wednesday after falling to a three-week low in the previous session, as declining U.S. Treasury yields reduced the currency’s appeal.
The Australian dollar hovered near a three-week high against the U.S. dollar after Reserve Bank of Australia Deputy Governor Andrew Hauser said at a conference that the inflation outlook appeared “materially worse,” leaving him uncertain about whether the central bank would need to raise interest rates again next month.
The Australian dollar rose 0.1% to $0.7013, just below Tuesday’s high of $0.7017.
The dollar index, which measures the U.S. currency against six major currencies, was steady at 101.78 after falling 0.2% on Tuesday.
Investors have turned to the dollar as a safe-haven asset amid market volatility caused by the war in the Middle East and the intense rush into artificial intelligence.
Wall Street posted strong gains as the technology earnings season got underway with results from SpaceX.
“Given the close link between stock market sentiment and growth expectations and the performance of major technology companies, their earnings results could have a significant impact on the dollar,” Commonwealth Bank of Australia analyst Carol Kong wrote in a client note.
She added that amid the “mixed” performance of traditional safe-haven assets this year, “the U.S. dollar has clearly outperformed.”
“The demand for the dollar as a safe haven is likely to fade once the conflict in the Middle East ends and energy prices decline. However, we expect the dollar to gain some ground in the coming months as foreign capital flows into U.S. markets increase,” she said.
Against the Japanese currency, the dollar was little changed at 158.33 yen. It stood at $1.1229 per euro and $1.33735 per British pound.
However, traders remained cautious toward the euro as France faces widespread protests against the government and a deteriorating fiscal situation.
The New Zealand dollar fell 0.1% to $0.5677.
Source: Reuters
