Dollar bulls pile in as Treasury yields rise

It took them awhile

For most of today the dollar seemed immune to the broad breakouts in Treasury yields. US 10-year yields broke the January high of 1.20% and 30s rose above 2.0%.

There was no reaction in early trade but as New York ramps up, it’s leading to a wave of US dollar buying. AUD/USD is down 50 pips from the highs of the day and it’s been a straight line move in the past hour.

It took them awhile

That’s typical of some of the moves elsewhere.

The thinking is increasingly that the US is coming out of the pandemic faster than everyone else and will be forced to hike earlier. We get some Fedspeak today but so far it has been vanilla, with Bullard on CNBC saying inflation was under control.

The rise in the dollar and yields so far hasn’t spilled over to equities. S&P 500 futures are up 14 points. That could be the next shoe to drop.

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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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