NEW YORK (Reuters) - The dollar fell for a fifth straight session against the yen on Tuesday, undermined by a persistent fall in U.S. Treasury yields which reflects uncertainty about global economic growth prospects.
The Australian dollar was the biggest mover of the day, falling to a two-week low against the greenback on the back of a slide in prices of iron ore, the country’s biggest export earner.
But gains in the U.S. dollar versus the Australian currency failed to give the greenback a lift against the yen, which has been on a five-day winning streak as U.S. Treasury yields have softened in four of the last six sessions.
Benchmark U.S. 10-year Treasury yields fell to 2.53 percent on Tuesday from 2.55 percent late Monday.
“The strong correlation between dollar/yen and Treasury yields continue to be the main driver,” said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.
“Part of that is due to renewed concerns about the health of the global economy and also Wall Street is off to a slow start.”
Despite signs of a spring economic rebound in the United States, several Federal Reserve speakers have voiced concern about weakness in the housing sector.
Investors have also expressed worries about China’s growth outlook.
In mid-morning trading, the dollar fell 0.3 percent to 101.26. The pair traded below its 200-day moving average, a key technical gauge, for a second straight day.
The Australian dollar, on the other hand, fell 0.8 percent to US$0.9258, after earlier dropping to US$0.9251, its lowest since May 5.
The Aussie has recovered solidly from lows reached in late January but worries over the pace of growth in China continue to weigh broadly on its outlook and Reserve Bank deputy governor Guy Debelle said potentially slower capital inflows to Australia pointed to more weakness.
The euro slipped 0.1 percent against the dollar at $1.3690.
Europe’s common currency could face more pressure ahead of potentially destabilising European Parliament elections later this week, where votes for anti-austerity, eurosceptic parties look set to increase.
Yields on Italian and Spanish government bonds rose on Monday, as investors, concerned that a rise in eurosceptic support could thwart reform efforts, took profits on recent price gains. Yields though were slightly lower on Tuesday.
In addition, the euro has been pressured of late by expectations of imminent easing from the European Central Bank.
“What we’re seeing is that we have seen the euro weaken and the dollar strengthen on the view that the ECB is sort of pinning itself into a corner and set to pursue aggressive policy action,” said Mark McCormick, currency strategist at Credit Agricole in New York.
Additional reporting by Patrick Graham in London Editing by W Simon