Dollar drops

LONDON: The US dollar fell to a three-week low on Tuesday as rising bets on an interest rate cut by the Federal Reserve weighed on Treasury yields, while broader concerns about global growth sent investors buying into the safe-haven yen, Reuters reported.

The benchmark 10-year Treasury’s yield fell to its lowest since September 2017 overnight, near 2%, after St. Louis Federal Reserve President James Bullard said a rate cut “may be warranted soon” given weak U.S. inflation and the threat to economic growth posed by global trade tensions.

The Japanese yen has been the main beneficiary from a shift toward assets investors deem a safer bet. It rose 0.2% to 107.845 yen per dollar, its strongest since mid-January. That hurt the dollar, which against a basket of currencies was down 0.1% to a three-week low, falling below 97 for the first time since April 18.

“As long as it (the dollar) is at the center of the trade conflict, U.S. yields fall due to concerns about real economic effects and the market is literally calling out for rate cuts, there are no positive arguments supporting the dollar,” Commerzbank analyst Antje Praefcke said.

Other strategists were less bearish on the dollar, arguing that rate cuts had already been priced into the currency and noting that if global growth does worsen, the dollar should benefit from its safe-haven credentials. The euro rose 0.3% to $1.1274, its highest since April 18, helped by dollar weakness.