The dollar strengthened for a fifth day against a basket of major peers as an agreement to start de-escalating the conflict in Ukraine sent stocks higher and pushed Treasuries down the most in a month.
Russia’s ruble led gains by emerging-market currencies as investors became more comfortable owning higher-returning assets. The backup in Treasury yields bolstered the appeal of the securities to international investors, who need to own U.S. currency to purchase the assets. The yen reversed gains versus the dollar. The pound reached the highest level in more than four years versus the greenback after data yesterday showed the U.K. jobless rate fell.
“Fear in the market is steadily declining,” Sebastien Galy, a senior currency strategist at Societe Generale SA in New York, said in a phone interview. “Dollar-yen mechanically moves higher with higher Treasuries yields. The tendency for dollar-yen to drift higher is definitely there.”
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose 0.1 percent to 1,010.68 at 5 p.m. New York time and touched 1,010.87, the highest level since April 8. It erased an earlier decline of 0.2 percent, its biggest drop since April 9.
The dollar gained 0.2 percent to 102.39 yen and touched 102.47, the highest since April 8. It fell as much as 0.4 percent earlier. The greenback was little changed at $1.3814 per euro after also falling 0.4 percent earlier. The euro gained 0.1 percent to 141.44 yen.
Financial markets in the U.S., U.K., Germany, Hong Kong, Singapore, Hong Kong and Australia are among those that will be shut for public holidays tomorrow.
Treasury yields climbed after four-way talks on the crisis in Ukraine ended with an accord aimed at taking the first steps toward easing tensions in the conflict. Pro-Russian separatists have seized Ukrainian government buildings and NATO estimates 40,000 troops are massed on the border.
U.S. 10-year yields increased as much as 10 basis points, the most since March 19, to 2.72 percent.
The ruble gained 1.1 percent to 35.6124 per dollar and rallied 1.3 percent to 41.6032 against the central bank’s target basket of dollars and euros.
Russian President Vladimir Putin “didn’t say anything to disturb the markets, and no bad news is now good news,” Vladimir Miklashevsky, strategist at Danske Bank A/S in Helsinki, said in e-mailed comments.
The Standard & Poor’s 500 Index of U.S. equities rose as much as 0.4 percent after falling 0.3 percent earlier. It ended the day up 0.1 percent.
JPMorgan Chase & Co’s G-7 Volatility Index dropped to 6.64 percent, the least since July 2007 on a closing basis and down from a record 27 percent in October 2008, shortly after the collapse of Lehman Brothers Holdings Inc.
The pound rose as much as 0.3 percent to $1.6842, the strongest since November 2009, before trading little changed at $1.6794. The government reported yesterday the U.K. unemployment rate dropped below the 7 percent threshold Bank of England Governor Mark Carney set as an initial guide for considering a boost in interest rates.
The U.K. central bank will release next week the minutes of its April policy meeting, where it left interest rates at a record-low 0.5 percent.
“The move in sterling follows yesterday’s strong employment numbers,” said Alvin Tan, a foreign-exchange strategist at Societe General SA in London. “On top of that, we have a general dollar retreat. It’s pretty clear the Fed is in no hurry to hike rates.”
China’s yuan advanced the most in more than a week to 6.2190 per dollar after the government said it will lower reserve-requirement ratios at some rural banks, fueling speculation authorities will act to stabilize growth.
The nation will cut the percentage of deposits that “qualified” rural banks must set aside as reserves to free up funds for lending to agriculture-related industries, the government said in a statement late yesterday.
South Africa’s rand was the biggest winner after the ruble among emerging-market currencies after Federal Reserve Chair Janet Yellen said yesterday the U.S. central bank has a “continuing commitment” to support the U.S. economy.
“The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained,” the central-bank chief said.
The rand snapped a five-day losing streak, strengthening 0.8 percent to 10.4865.