FOREX-Dollar resumes rebound from multi-year lows as yields provide support

Reuters

Warning: This material has been prepared by a third party company, Reuters, which is independent of Davy. Davy has not reviewed the material and accepts no responsibility for errors or omissions, or for the information or opinions contained therein. It does not constitute investment advice.

    * Dollar index trades higher
    * Sterling gains against euro

 (Updates to U.S. afternoon)
    By Saqib Iqbal Ahmed
    NEW YORK, Jan 13 (Reuters) - The U.S. dollar on Wednesday
resumed its rebound from near three-week lows, rising broadly on
hopes of higher government spending by President-elect Joe
Biden's incoming administration and an ongoing economic recovery
from the coronavirus crisis. 
    A rise in U.S. Treasury yields, driven by expectations that
Biden's administration will ramp up spending, has helped boost
the battered dollar in recent sessions, although it slumped on
Tuesday.
    The greenback has also found support from expectations of a
continued economic recovery in the United States, even as
countries in Europe resort to lockdowns to fend off a second
COVID-19 wave.
    "You are seeing a continuance of the U.S. outperformance
trade," Karl Schamotta, chief market strategist at Cambridge
Global Payments in Toronto.
    U.S. Treasury yields slid on Wednesday as the Treasury
Department completed its final sale of $120 billion in
coupon-bearing supply this week, in which investors showed
strong demand for long-dated bonds.  urn:newsml:reuters.com:*:nL1N2JO2GV
    Yields on the benchmark Treasury note  US10YT=RR  dropped to
1.071%, down from an almost 10-month high of 1.187% on Tuesday.
    Still, the pop in the 10-year Treasury yield above 1% has
put a firmer floor under the dollar, Joe Manimbo, senior market
analyst at Western Union Business Solutions, said in a note.
    The U.S. dollar index  =USD  was 0.37% higher at 90.359. The
index has climbed 1.3% since falling to near a three-year low of
89.21 last week. 
    The rally has raised worries about the viability of betting
on further losses for the dollar after its 7% decline last year.
 urn:newsml:reuters.com:*:nL4N2JN3MS
    Data on Wednesday showed U.S. consumer prices increased
solidly in December amid a surge in the cost of gasoline, though
underlying inflation remained tame as the COVID-19 pandemic
weighed on the labor market and services industry. urn:newsml:reuters.com:*:nL1N2JO1BB
    "Overall, the firm headline December CPI gain was mostly due
to an energy price pop that is extending into January, though
lean readings for the core components suggest little risk of the
inflation figures heating up anytime soon," Michael Englund,
chief economist at Action Economics, said in a note.
    Sterling hit a seven-week high against the euro on
Wednesday, building on gains during the previous session when
the Bank of England's governor dismissed the idea of negative
interest rates, while optimism over the pace of Britain's
vaccination rollout also offered support. urn:newsml:reuters.com:*:nL1N2JO0R6  GBP/ 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates    https://tmsnrt.rs/2RBWI5E
The dollar versus Treasury yields    https://tmsnrt.rs/3iaOy25
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Saqib Iqbal Ahmed
Editing by Paul Simao)
 ((saqib.ahmed@thomsonreuters.com; @SaqibReports; +1 646 223
6054; Reuters Messaging:
saqib.ahmed.thomsonreuters.com@reuters.net))

Warning: This content may be provided by regulated and unregulated entities and is not created, reviewed or endorsed by Davy. It is provided for general information purposes only and does not constitute a recommendation or solicitation to purchase or sell any security or make any other type of investment or investment decision. Importantly, it does not constitute investment advice, as it does not contemplate the personal circumstances of any particular person or group of persons. Neither Davy nor the providers of the Third Party Content will be liable for any investment decision made based on the reliance on or use of such data, or any liability that may arise due to delays or interruptions in the delivery of the Third Party Content for any reason.