Dollar falls lower as Treasury yields recede By

© Reuters.

By Peter Nurse – The dollar weakened Wednesday as a fall in US Treasury yields blew the wind out of the dollar’s sails. At 3:05 am ET (0805 GMT), the dollar index, which tracks the dollar against a basket of six other currencies, was down 0.2% to 89.907, halting its three-day bounce after hitting its level. lowest since April 2018. down 0.1% to 103.62, up 0.1% to $ 1.2220. it was up 0.3% to $ 1.3697, driven by Bank of England Governor Andrew Bailey, who spoke down on the negative rate outlook, while the risk-sensitive rate rose 0.1% to 0.7778. Benchmark Treasury yields fell nearly 7 basis points from a 10-month high on Tuesday after strong demand at a 10-year $ 38 billion auction and comments from US Federal Reserve officials. That they reiterate that monetary policy will continue to be supportive. Kansas City Fed Chair Esther George said Tuesday that she does not expect the Fed to react if inflation exceeds the central bank’s 2% target. “With Fed rate expectations at a low, any further increase in US yields will continue to be a function of rising inflation expectations or the term premium, leaving us confident in our bearish call for the dollar.” ING analysts said in an investigative note. Democrats who claimed the Senate after Georgia’s second round of elections earlier this month had raised hopes of strong stimulus measures, financed largely by government loans. This resulted in a sell-off in the bond market that raised US yields considerably, helping to stem the dollar’s decline. Investors are now waiting for the US inflation figures for December, to be released later in the day. The consensus calls for an increase of 0.4% from 0.2% the previous month. The Fed’s December Beige Book is also due on Wednesday. There are more speakers from the Federal Reserve scheduled for Wednesday, and traders will be on the lookout for more clues as to when the central bank will begin reducing its asset purchases from its current level of $ 120 billion a month.

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