The dollar fell as Treasury two-year yields declined for a second day on speculation lower-than-forecast job growth may prompt the Federal Reserve to be less aggressive when reducing monetary stimulus.
The yen weakened against its 16 most-traded peers as a report showed the nation’s economy expanded faster than initially estimated and as Tokyo’s winning bid to host the 2020 Olympics boosted optimism in the government’s policies. Australia’s dollar touched a six-week high and the South Korean won climbed to the highest level since May after a report showed China’s exports increased. The Canadian dollar extended gains after building permits rose to a record in July.
“The dollar has been driven higher by front-end rates,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a telephone interview. “The majority is still looking for tapering, but that view has probably become more questionable or less clear cut,” he said of the market’s view of Fed policy.
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