Dollar retreats from 9-month high as stock rally lifts sentiment By

By Kevin Buckland

TOKYO (Reuters) – The safe-haven dollar retreated from more-than-nine-month highs against major peers on Monday as a bounce in Asian stocks lifted sentiment, despite the continued spread of the Delta coronavirus variant.

The , which measures the currency against six rivals, declined 0.19% to 93.311 from Friday, when it climbed as high as 93.734 for the first time since Nov. 4.

The move came as equities rebounded across the region, with base metals prices up as hopes of an improvement in demand rose after China, the world’s top metals consumer, reported no new locally transmitted COVID-19 cases for the first time since July. Wall Street’s stronger finish on Friday also underpinned sentiment.

Commodity-linked currencies including the and Canadian dollar led the rebound against the dollar, following steep declines last week.

The Aussie climbed 0.29% to $0.71575, after reaching a 9 1/2-month low of $0.71065 on Friday.

Against the Canadian dollar, the greenback slipped 0.25% to C$1.2776. It surged to an eight-month high of C$1.2949 at the end of last week.

Leading cryptocurrency bitcoin topped $50,000 for the first time since mid-May, and last traded 2.06% higher at $50,333.24.

The dollar has been buoyed this month by a flight to safety as a surge in the fast-spreading Delta variant threatens to derail a global economic recovery, at the same time as the Federal Reserve is signaling a tapering of stimulus as soon as this year.

COVID-19 considerations prompted the Fed to move its annual Jackson Hole, Wyoming symposium to an online format, to be held this Friday, raising questions about the central bank’s broader assessment of the Delta variant’s economic impact.

Fed Chair Jerome Powell, who has thus far mostly played down the repercussions, gives a speech on the economic outlook at the event, which will be carefully parsed by traders eager for details of the timing and pace of monetary policy tightening.

“I’m thinking the Fed could sound somewhat hawkish at the Jackson Hole symposium this week, so for now the firmness in the U.S. dollar could continue,” said Osamu Takashima, head of G10 FX strategy at Citigroup (NYSE:) Global Markets Japan, who anticipates a tapering announcement next month.

“Commodity currencies are rebounding a bit now, but this bounce won’t be so large.”

Even if the Fed comes out more dovish, delaying a taper would not necessarily dent the currency, according to National Australia Bank (OTC:) (NAB).

“This can just as easily play out USD positive as negative, from a risk sentiment/safe-haven USD demand perspective,” Ray Attrill, NAB’s head of currency strategy, wrote in a client note.

Meanwhile, rising infections and new restrictions in Australia and New Zealand are keeping those currencies heavy, according to the note.

“It remains…