Dollar Up as Yields Stabilize

In recent weeks, the dollar has closely tracked a surge in Treasury yields. Higher yields were boosting the greenback’s appeal and shaking investor confidence. In effect, spurring demand for the safest assets.

On Wednesday, the currency pushed higher in early European forex trading, helped by the stabilization of  U.S. Treasury yields. This was after the yields’ drop from one-year highs.

The Dollar Index was up 0.2% at 92.155 At 3:55 AM ET (0755 GMT). It fell back from a 3 1/2-month high of 92.506 on Tuesday.

The EUR/USD pair fell 0.1% to 1.1881, after climbing from a 3-1/2-month low of $1.1835 on Tuesday. The USD/JPY pair added 0.3% at 108.83 and the GBP/USD pair lost 0.2% to 1.3871. The risk-sensitive AUD/USD shed 0.3% to 0.7690.

Also on Wednesday, the benchmark 10-year Treasury yield  stabilized around 1.54%. This was after a three-day drop from a one-year high of 1.6250%.

Tuesday saw a successful auction of $58 billion in U.S. three-year notes. In late February, weak demand at an auction of seven-year notes helped start the trend of higher yields.

Investors are now focusing at an auction of $38 billion in 10-year notes. This is to see whether this can also be absorbed successfully. Watch out for more of these to come with President Joe Biden’s $1.9 trillion fiscal package to be funded.

More Currencies Movements

EUR/NOK traded up 0.2% at 10.0897, near at 12-month low, while USD/NOK traded up 0.3% at 8.4932, near a 2-year low.

USD/CNY rose to 6.5073, with last month’s CPI growing 0.6% month-on-month while contracting 0.2% year-on-year. Furthermore, February’s PPI grew 1.7% year-on-year.

The euro slipped 0.2% lower, as the European Central Bank (ECB) is due to hand down its policy decision on Thursday. Previously on Tuesday,  the euro looked set to snap its four-day losing streak against the dollar. It shrugged off weaker eurozone Q4 growth ahead of the ECB meeting later this week.

Eurozone quarterly GDP  was revised down to -0.7% in the fourth quarter from the preliminary reading of -0.6% despite stronger growth from Germany. The lockdowns across the euro area pressured its growth.

Previously, EUR/USD rose 0.50% to $1.1902. 

In the cryptoworld, Bitcoin rose as high as $55,855 earlier in the session. The coin was topping the $55,000 mark for the first time since Feb. 22, before falling back to $53,995.