2022 Puts Dollar into Strong Position As Yields Rise
ZFX – The US dollar rose for the first trading day since the new year, in line with government bond yields as investors anticipate the Federal Reserve will keep raising interest rates in 2022.
While the surge in coronavirus cases caused by the Omicron variant continues to impact global travel and public services, investors remain optimistic that the government will not go into lockdown.
On Monday, the U.S. Food and Drug Administration authorized the use of the third dose of Pfizer and BioNTech COVID-19 vaccines for children between the ages of 12 and 15, and narrowed the time for all booster shots to five months, from six months after the primary dose.
The yield on the US two-year bond, which is sensitive to expectations of a rate hike, along with the 5-year bond, jumped to the highest level since March 2020. Benchmark US 10-year and 5-year yields rose to their highest in six weeks. The US central bank is expected to start raising interest rates in mid-2022.
Bregar Capital Corp president and CEO Erick Bregar said, “When it comes anything related to COVID, all markets pay very short attention and it’s been like this from the start”.
“I don’t feel the risk-off vibe today as oil is steady, stocks are still green… right now yields are the driver.”
The dollar index was up 0.56%, with the euro down 0.60% to $1.1305.
The greenback is on track for its biggest daily percentage gain since Dec. 17.
Economic data showed the manufacturing gauge for December fell to 57.7 from 57.8 earlier, but still showed expansion. November construction spending rose 0.4%, below expectations calling for a 0.6% increase.
The Dollar Index, or DXY, is indeed on the ‘upper side’ with a strong bullish movement above the 50, 100 and 200 moving averages. The strengthening of the dollar itself caused DXY to successfully break the daily resistance area at 96,161. Now DXY is ready to challenge the next resistance at 96,663. Apart from that, gold also closed bearish after the strengthening of the US dollar.
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