Dollar dips as Treasury yields stall, commodity currencies gain

Author of the article: LONDON — The dollar dipped on Thursday as this week’s rally in U.S. Treasury yields paused, and commodity-linked currencies such as the Canadian and Australian dollars gained amid rises in commodity prices and optimism about global economic growth. The euro and sterling rose, gradually regaining some ground after suffering their worst…
Dollar dips as Treasury yields stall, commodity currencies gain

Author of the article:

LONDON — The dollar dipped on Thursday as this week’s rally in U.S. Treasury yields paused, and commodity-linked currencies such as the Canadian and Australian dollars gained amid rises in commodity prices and optimism about global economic growth.

The euro and sterling rose, gradually regaining some ground after suffering their worst days in a month on Tuesday, when the dollar was lifted by a jump in U.S. Treasury yields.

The European single currency was last at $1.1368, up 0.2% on the day. The pound was 0.2% higher at $1.3636 and the yen was unchanged at 114.33 per dollar.

This left the dollar index, which measures the greenback against six major peers, at 95.428, 0.2% lower on the session.

The dollar has rallied in recent sessions although it has not performed as well as expected given the dramatic rise in expectations for the U.S. Federal Reserve to begin hiking interest rates as early as March to curb soaring inflation.

U.S. Benchmark 10-year note yields were at 1.8469%, off their two-year high of 1.902% reached early on Wednesday.

The gains come as traders prepare for the United States to tighten monetary policy at a faster pace than previously thought. Fed funds futures have fully priced in a rate hike in March and four in all for 2022.

Elsewhere, a combination of higher commodity prices and expectations for tighter policy supported the Aussie and the Loonie.

The Aussie firmed 0.3%, extending advances from the previous day, and the Canadian dollar was heading back towards the 10-week high it touched on Wednesday, with one U.S. dollar worth C$1.2489.

Analysts said a strong Australian labor market reading overnight was also helping the Aussie.

“The latest Australian employment report provided further clear evidence that labor market conditions continue to tighten, and have reinforced expectations that the RBA (Reserve Bank of Australia) will decide to bring an immediate end to the QE (quantitative easing) program at their next policy meeting on 1st February,” said MUFG analyst Lee Hardman.

Hardman noted that the Canadian dollar has been the best performing G10 currency in 2022, attributing that to a sharp rebound in oil prices — which have hit seven-year highs — and speculation the Bank of Canada will soon start to hike rates.

The Norwegian crown, another currency linked to the price of oil, also performed well, rising 0.2% against both the euro and the dollar.

“Overnight commodity prices were the big driver for commodity currencies, but you’ve still got the undertone that (COVID-19 variant) Omicron is not going to have a lasting detrimental impact on the global economic outlook,” said Kim Mundy, senior economist and currency strategist at Commonwealth Bank of Australia.

(Reporting by Tommy Wilkes, Additional reporting by Alun John in Hong Kong, Editing by Timothy Heritage)

Financial Post Top Stories

Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

Read More

Total
0
Shares
Leave a Reply

Your email address will not be published.

Related Posts
Europe Gas Rises as Russian Supply Via Key Route Stays in Focus
Read More

Europe Gas Rises as Russian Supply Via Key Route Stays in Focus

European natural gas prices rose as Russian supply through a major pipeline remained at the center of traders’ attention despite stable shipments for a second day. Author of the article: Bloomberg News Verity Ratcliffe A windsock indicates wind direction above a storage tank at the gas receiving compressor station of the Nord Stream 1 natural…
Oil prices edge up on signs of improving demand
Read More

Oil prices edge up on signs of improving demand

Author of the article: Reuters Emily Chow and Sonali Paul KUALA LUMPUR — Oil prices rose as much as $1 on Friday on signs of improving fuel demand, although further gains were capped as the market awaited clues from the U.S. Federal Reserve chairman on the outlook for rate hikes in a speech later in…
Moderna refused China request to reveal vaccine technology – FT
Read More

Moderna refused China request to reveal vaccine technology – FT

Author of the article: Moderna Inc has refused to hand over to China the core intellectual property behind the development of its COVID-19 vaccine, leading to a collapse in negotiations on its sale there, the Financial Times reported on Saturday, citing people familiar with the matter. The Cambridge, Massachusetts-based pharmaceutical company turned down China’s request…