The U.S. dollar held near mid2018 lows on Monday as bullish sentiment across global markets prompted investors to buy riskier currencies such as the Chinese yuan, despite a resurgent pandemic.
Low U.S. interest rates, massive U.S. budget and trade deficits and a belief that rebounding world trade will drive nondollar currencies higher have set the dollar on a downward course.
The U.S. dollar slipped further through the threshold of the new year as global risk sentiment stayed buoyant, said Alvin Tan, an FX strategist at RBC Capital Markets.
The dollar index posted its first annual los9s since 2017 last year. It has fallen roughly 13 from a threeyear peak at the height of the pandemic panic in March.
It was last 0.14 weaker at 89.640 and not far above last weeks more than twoandahalfyear low of 89.515.
Manufacturing activity expanded in Japan, South Korea and Taiwan, according to PMI surveys, the latest indication that manufacturers in the region continue to recover from the damage caused by the COVID19 pandemic last year.
The Chinese yuan rose over 0.9 to a 30month high of 6.4693 per dollar.
Chinese factory activity continued to accelerate in December, though the PMI missed forecasts at 53.0.
The safehaven yen rose 0.4 to 102.90 per dollar, and looked to test resistance at 102.55, after Japanese Prime Minister Yoshihide Suga said his government was mulling a state of emergency in Tokyo as coronavirus cases rise.
The softening dollar boosted commodity prices and…