The dollar fell yesterday as US Treasury yields stopped rising after a wave of increases, which gave an opportunity to the stock markets and helped the euro and the pound to catch a breath and recover after hitting multi-year lows.
According to “Archyde.com”, the Australian dollar was also striking, as it fell by about 1 percent after the country’s central bank surprised the markets by raising interest rates less than expected, before recovering and catching up with a broad recovery wave.
The euro rose 0.5 percent to $0.9876, after hitting a 20-year low of $0.9528 on September 26. The pound also rose 0.6 percent to $1.1390, after hitting an all-time low of $1.0327 on the same day.
The yield on US 10-year Treasury bonds was 3.5677 per cent, sharply down from last week when it briefly rose above 4 per cent.
The recent rises in US bond yields along with aggressive interest rate hikes by the Federal Reserve have been among the factors behind the dollar’s recent gains.
In Asia, the dollar changed little against the yen, reaching 144.7, staying below 145 yen, which it crossed briefly yesterday for the first time since the Japanese authorities intervened to support its currency on September 22nd.
The Australian dollar rose 0.15 percent to $0.6525.
On Monday, the pound jumped against the dollar after Britain announced a plan to scrap the country’s highest income tax rate, and the dollar fell against other major currencies.
Sterling rose against the dollar yesterday, after reports that the plan was reversed, to the highest rate of the currency since September 22, the day before British Finance Minister Kwasi Quarting announced a new “growth plan” that cut taxes and restrictions funded by extensive government borrowing, which sowed the markets.
Gold prices also recorded their highest level in three weeks yesterday, motivating all precious metals to achieve gains, with the dollar and US Treasury bond yields falling again after recording their highest levels in years, which restored the attraction to the non-yielding precious metal.
And gold rose in spot transactions 2.5 percent to 1707.20 dollars an ounce (an ounce) during trading yesterday, after earlier touching the highest level since September 13 at 1710.39 dollars.
And US gold futures rose 0.9 percent to $ 1717.60.
A falling dollar index makes gold less expensive for overseas buyers.
As for other precious metals, the price of silver in spot transactions jumped 1 percent to $ 20.96 an ounce, after hitting its highest level since June.
The price of palladium also jumped as much as 4.2 percent, before recording an increase of 3.3 percent in the latest trading to $ 2294.79, and platinum rose 1.2 percent to $ 912.85 an ounce.
Gold rose more than 2 percent on Monday, as the dollar and US Treasury yields tumbled, as a recent dip in the precious metal tempted investors to buy, and silver jumped in what may be its biggest daily gain since late 2008.
US gold futures rose 1.8 percent to settle at $1,702.
Silver jumped 8.8 percent to $20.67 an ounce, the highest level since mid-August.
As for other precious metals, the price of palladium jumped 2.9 percent to $ 2219.83, and platinum nearly 5 percent to $ 901.52 an ounce at the settlement on Monday.
It is noteworthy that stocks on Wall Street ended trading yesterday with sharp increases at the beginning of the last quarter of the turbulent year, amid increases in interest rates, inflation that reached record levels and fears of slowing economic growth.
All major sectors listed on the Standard & Poor’s 500 Index increased, led by the energy sector.
The three major indices on Wall Street ended the third quarter of the year on Friday lower due to growing concerns that the ultra-tight monetary policy from the US Central Bank will push the economy into a recession.
European shares also rose on Monday on a positive start to the last quarter of this year, as a batch of bleak economic activity data allayed some concerns about the pace of monetary tightening by central banks to curb hyperinflation.
The Stoxx 600 has fallen nearly 20 percent so far this year in a region plagued by an energy crisis, worsening Russian-Ukrainian conflict and signs of financial tightening by the US Federal Reserve and major central banks, undermining investors’ risk appetite.
In addition, South Korean Finance Minister Cho Kyung-ho said yesterday that the government will implement appropriate precautionary measures while reviewing all available options according to possible scenarios for turmoil in financial and exchange markets.
Zhou’s remarks came during a parliamentary review session of the Ministry of Finance’s performance, expressing concerns that the current turbulent market situation may continue for a long time, according to “German”.
Finally, the South Korean stock market witnessed turmoil with a sharp decline in the price of the South Korean won against the dollar, in light of fears of a global economic recession with the direction of the major central banks in the world, except for Japan and China, to tighten monetary policy and raise interest rates at a rapid pace.
“High inflation caused by external factors has imposed hardship on ordinary citizens and the most vulnerable groups (South Koreans) and exacerbated volatility in the money and exchange markets. Fears of an economic slowdown have increased, with the momentum of exports and investment waning,” Cho said.
He explained that the government will take all necessary steps in a timely and preventive manner by carefully reviewing the market situation and all possible scenarios.
The minister also pledged efforts to strengthen the financial situation and improve South Korea’s credit rating.
Meanwhile, the Philippine central bank said it was taking measures to “deal with any turmoil” in the financial market, calling on citizens not to get undue benefits from the ongoing developments.
And the “Bloomberg” news agency reported, yesterday, that the “Central of the Philippines” said in an e-mail statement, “I call on those who have the means not to take undue advantage of the changing market conditions.”
The Central Bank added: “This does not help the Philippine peso, and it does not help the Filipinos.”
The Central Bank’s statement came at a time when the peso fell to a record low yesterday. The peso has fallen by more than 13 percent this year, as the US Federal Reserve’s hike in interest rates has sent the dollar up to unprecedented levels.
The Finnish currency fell 0.6 percent to 85.86 pesos per dollar during yesterday’s trading. The Philippine central bank did not give any details about the steps it is taking.