The safe-harbour yen and dollar started the week firmer against riskier currencies like the Aussie as rising COVID-19 cases and a decline in Asian equities set a cautious tone ahead of the Federal Reserve’s meeting this week.
The yen rose about 0.5% to 81.08 per Australian dollar on Monday, while the dollar gained 0.2% to $0.7351 per Aussie, approaching an almost eight-month high of $0.72895 reached last week.
Against the dollar, the yen added 0.2% to 110.32, helped by a decline in U.S. Treasury yields.
The euro rose 0.1% to $1.17795, stabilizing after its drop last week to the lowest since early April at $1.1752.
The dollar index, which measures the currency against six major peers, slipped slightly to 92.833 due to pressure from the euro and yen, but was still close to last week’s 3-1/2-month high of 93.194.
It has gained nearly 4% from a recent low on May 25 as an improving U.S. economy bolstered the outlook for the Fed to start paring asset purchases as early as this year.
Commonwealth Bank of Australia projects the dollar can continue to strengthen this week on the possibility of the Fed moving a step closer to tapering at the conclusion of its two-day policy meeting on Wednesday.
