But the greenback rose against other higher-yielding currencies, benefiting from the flight from risk triggered by monetary tightening in China and the stock market’s weakness on disappointing earnings reports.
“It’s all about risk aversion,” said Camilla Sutton, a currency strategist at Scotial Capital in Toronto.
The Japanese currency also advanced sharply against the euro, pushing Europe’s common currency to a session low at Y131.64, its lowest level since Jan. 5. The dollar dipped to a session low of Y90.73, its lowest level since Dec. 21.
Tuesday afternoon in New York, the dollar was at Y90.95, down from Y92.06 late Monday, while the euro was at Y131.73, down from Y133.78, according to EBS via CQG.
The euro was at $1.4489, down from $1.4524 late Monday.
The U.K. pound was at $1.6165, up from $1.6112.
The dollar was at CHF1.0185, up from CHF1.0157. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 77.011, up from 76.983. As a result, Deutsche Bank’s PowerShares US Dollar Index Bearish (UDN) exchange-traded fund was trading down 0.02% from late Monday, while its PowerShares US Dollar Index Bullish (UUP) was unchanged from a day ago.
The two exchange-traded funds are based on Deutsche Bank currency futures indexes, whose composition mirrors that of ICE’s Dollar Index.
For most of 2009, the dollar weakened against the yen, hitting a 14-year low of Y84.82 in late November, as near-zero interest rates in the U.S. prompted investors to borrow cheap dollars to fund purchases of higher-yielding currencies, a role traditionally played by the yen.
The dollar rallied against the yen through December and early this year, but has retreated since Friday as short-dated Treasury yields, the most sensitive to official rate changes, have fallen.
Friday’s disappointing U.S. jobs report suggested that the Fed will remain on hold for a while, triggering renewed weakness in the greenback.
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