- Risk appetite returns as strong earnings lift Wall Street
- Euro strengthens against dollar ahead of ECB policy decision
- Musk hinted that Tesla would accept Bitcoin as payment again
TOKYO, July 22 (Reuters) – The safe-haven US dollar and yen tumbled on Thursday after retreating from multi-month highs amid a recovery in risk appetite as strong earnings boost Wall Street stocks.
Cryptocurrencies took a hit after Tesla Inc (TSLA.O) CEO Elon Musk said the company would “likely” continue to accept bitcoin for payment. read more
The dollar index, which measures the currency against six major peers, is stuck at 92,770 after pulling back from the 3-and-a-half-month high of 93,194 touched on Wednesday.
The yen traded at 129,950 per euro from 128,610, an almost four-month high earlier this week, and a 5 1/2-month high of 79.85 from 81.07 against the Australian dollar.
“Strong earnings have cleared Delta concerns in the US,” National Australia Bank analyst Tapas Strickland said in a note to customers.
“There is consensus that the Delta strain does not pose an immediate risk to recovery,” he said, as countries accelerate vaccination efforts in response, delaying reopening by up to three months.
Sterling traded at $1.3717, rebounding from a five-and-a-half-month low of $1,35725 on Tuesday, despite increasing Delta variant cases in the UK and confusion over the lifting of restrictions in the UK.
The Australian dollar changed hands at $0.7350 the previous day, from an eight-month low of $0.72895, even as coronavirus cases soared despite half the Australian population being quarantined. read more
The euro remained at $1.1789, up from $1.1752, a 3-1.5-month low on Wednesday, ahead of the closely-watched European Central Bank policy decision later in the global day.
Policy makers will implement changes in their strategy for the first time and are almost certain that they will promise an even longer stimulus period to meet their commitment to increase inflation. read more
Analysts generally think that the ECB’s dovishment weakens the euro in the medium term.
“On balance, the ECB’s new inflation target shows that monetary policy will remain ultra-compliant for a longer period of time and it will act as a headwind for the euro,” Commonwealth Bank of Australia strategists Kim Mundy and Carol Kong said in a study. Note.
“In fact, we expect the ECB to be one of the last central banks to tighten our policy.”
In cryptocurrencies, bitcoin made the 7.9% jump Wednesday – the biggest since mid-June – to trade just north of $32,000.
Competing ether traded just under $2,000 after gaining 12%.
Currency quote prices at 0525 GMT
Tokyo Forex market information from BOJ
Reporting from Kevin Buckland; Editing by Sam Holmes
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