Dollar and Yen retreat as risk sentiment resurfaces; Musk bitcoin buoys

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Risk appetite returns as high profits rise Wall Street Euro strengthens against dollar ahead of ECB policy move Musk hints Tesla will accept bitcoin as payment again

TOKYO, July 22 (Reuters) – Safe havens for the US dollar and the yen retreated on Thursday, after pulling back from multi-month highs amid rising risk appetite as strong earnings rallied boosted Wall Street stocks.

Cryptocurrencies saw gains after Tesla Inc (TSLA.O) CEO Elon Musk said the company would “very likely” resume accepting bitcoin for payment. Read more

The dollar index, which measures the currency against six major peers, stood at 92.770 after falling from a 3 1/2 month high of 93.194 on Wednesday.

The yen was trading at 129.950 per euro, rising from an almost four-month high to 128.610 earlier this week, and 81.07 per Australian dollar, after a 5.5-month high of 79.85 .

“Strong earnings swept away Delta concerns in the US,” weighing on safe-haven currencies, National Australia Bank analyst Tapas Strickland wrote in a note to clients.

“The consensus is that (the Delta strain) does not pose an immediate risk for the recovery,” delaying the reopening for up to three months as countries step up vaccination campaigns in response, he said.

The British pound traded at $ 1.3717, recovering from a 5.5-month low of $ 1.35725 reached on Tuesday, despite the increase in cases of the Delta variant in Britain and confusion over the restrictions lifted in England.

The Aussie changed hands at $ 0.7350, from an eight-month low of $ 0.72895 the day before, even as coronavirus cases rose despite half of Australia’s population being in custody. Read more

The euro was $ 1.1789, up from Wednesday’s 3.5-month low of $ 1.1752 ahead of a closely watched policy move by the European Central Bank later today on the world day.

Policymakers will implement changes in their strategy for the first time and are almost certain to promise an even longer stimulus period to deliver on their pledge to boost inflation.

Analysts generally see the ECB’s appeasement weakening the euro in the medium term.

“Overall, the ECB’s new inflation target suggests that monetary policy will remain ultra-accommodative for an even longer period,” which will act as a headwind for the euro, wrote the strategists of the Commonwealth Bank of Australia, Kim Mundy and Carol Kong, in a research note.

“Indeed, we expect the ECB to be one of the last central banks under our cover to tighten its policy.”

In cryptocurrencies, bitcoin maintained Wednesday’s 7.9% jump – the largest since mid-June – to trade just north of $ 32,000.

Rival Ether traded slightly below $ 2,000 after rising 12%.

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Price of currency offers at 05:25 GMT

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Reporting by Kevin Buckland; Editing by Sam Holmes

Our Standards: Thomson Reuters Trust Principles.

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