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
Wage catch-up to prolong Europe’s inflation battle
Read More

Wage catch-up to prolong Europe’s inflation battle

FRANKFURT — “We’ve been short-changed for too long,” is how many of Europe’s top labor unions are framing wage claims this year, promising industrial action if those demands go unheard. The euro zone’s 165 million workers have watched their wages slip behind inflation for a third year running even as companies rake in profits by…
Arabica coffee hits 3-1/2 week low, sugar also down
Read More

Arabica coffee hits 3-1/2 week low, sugar also down

LONDON — Arabica coffee futures on ICE hit a 3-1/2 week low on Friday, weighed down by favorable crop weather in top producer Brazil, while sugar and cocoa prices also fell. COFFEE Financial Post Top Stories Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc. By…
Sanofi’s Dupixent wins U.S. approval for bigger use
Read More

Sanofi’s Dupixent wins U.S. approval for bigger use

Author of the article: Sanofi on Friday won expanded U.S. approval for its best-selling Dupixent injection to treat an allergic inflammation of the esophagus, the Food and Drug Administration said. There are more than 160,000 patients in the United States living with eosinophilic esophagitis, according to Sanofi. The chronic condition typically requires repeated treatments such…