Dollar stands tall as U.S. yields resume climb

LONDON Reuters) – The U.S. dollar gained on Monday, climbing towards a 3-1/2-month high, as a broad rise in Treasury yields spooked investor sentiment in stock markets.

Having fallen 4% in the last quarter of 2020, the dollar has strengthened more than 2.4% year-to-date against rivals as investors expect the broad rise in U.S. bond yields to weigh on stretched equity valuations and boost the greenback’s appeal.

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“Rising U.S. yields have added to equity market volatility and supported the US dollar,” UBS strategists said in a daily note. “The Federal Reserve remains dovish, but chair Jerome Powell chose not to push back verbally against higher yields providing a further short-term boost to the greenback.”

Yield trends have diverged across major markets.

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While U.S. yields increased a hefty 10 basis points last week, German yields dipped nearly 5 basis points, pulling the euro to a near four-month low below the $1.19 level.

BofA analyst Athanasios Vamvakidis argued the potent mix of U.S. stimulus, faster reopening and greater consumer firepower was a clear positive for the dollar.

The Senate passed a $1.9 trillion COVID-19 relief plan, a day after a stunning U.S. jobs report sent the greenback to its highest level since November 2020.

FX Signals – Dollar climbs against yen

The Australian dollar rose 0.2% to $0.7696, but was well off its session high of $0.77230. The New Zealand dollar was down about 0.1% after earlier rising 0.4% to $0.719.

Dollar stands tall despite

The antipodean currencies have been in demand because of their links to the global commodities trade.

The dollar held near a one-month high against the British pound, at $1.3819. Against the low-yielding yen JPY=EBS, the greenback held steady at 108.46 yen, having hit a nine-month high of 108.645 on Friday.

Dollar stands tall as U.S. yields resume climb

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Dollar stands tall as U.S. yields resume climb

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Dollar stands tall as U.S. yields resume climb