Singapore, Dec 29 (BNA): The dollar pared some gains after long-term US Treasury yields rose overnight, though investors remained on edge as the year ended as initial optimism about China’s reopening faded.
After China removed its quarantine rule for inbound travelers from January 8, countries such as the United States, Japan and India said they would require COVID tests for travelers from China.
Reuters reports that the speed with which the country has rolled back COVID rules has overwhelmed its health system and raised concerns about the spread of the virus.
The Japanese yen rose nearly 0.6% to 133.71 per dollar, languishing near the one-week low of 134.50 hit in the previous session.
The pound rose 0.1% to $1.2030, but it wasn’t far from the three-week lows of $1.1993 hit last week.
The euro rose 0.12% to $1.0623.
“Many countries adopting an additional layer of testing for travelers from China reflects a stuttering resumption of travel amid the outbreak in China,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank. “This may also raise fears of new strains of COVID that could once again disrupt the global recovery.”
Uncertainty about the global economic outlook, coupled with growing concerns about a recession in the United States, sent the two-year Treasury yield, which usually moves according to interest rate expectations, into a tailspin overnight. The last time it was 4.3678%.
Meanwhile, the yield on the benchmark 10-year US Treasury note settled at 3.8637%, after rising to a more than one-month high of 3.8920% overnight.
Against a basket of currencies, the US Dollar Index was flat at 104.33.
“In the near term, there is still a big question mark over how quickly we can overcome the resurgence of COVID,” said Moh Seong Sim, currency analyst at Bank of Singapore. “But in the medium term… I think the growth outlook for China can be more stable and less bumpy, and that in turn means the rest of the world can benefit from that as well.”
The Australian dollar was 0.07% higher at $0.6745, while the New Zealand dollar was up 0.55% at $0.6345.
The offshore Chinese yuan rose more than 0.2% to 6.9789 per dollar.
In cryptocurrencies, bitcoin rose 0.12% to $16,560, while ether rose 0.3% to $1,193.40, though both are on track for more than 60% declines this year.
SM