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Dollar Retains Strength on Rising Yields; Nonfarm Payrolls Eyed By


© Reuters.

Peter Nurse – The dollar pushed higher in early European trade Tuesday, helped by rising U.S. Treasury yields, but traded below last week’s peak with investors waiting for Friday’s key U.S. employment release for clues on the Federal Reserve’s thinking over bond-buying tapering. 

At 02:55 ET (0755 GMT), Dollar Index, which measures the greenback’s performance against six currencies, was 0.2% higher at 94.015. This is just 0.2% less than the last week’s 94.504 mark, making it its highest point since September 2020.

The stock index went up 0.3% to 111.17, 0.2% down to 1.1597 and 0.1% down to 1.3594. Following the reiterated decision that interest rates will not be raised until 2024 and its previous meeting, 0.4% of risk sensitive was lost to 0.7257.

The dollar has benefited from climbing bond yields as investors fretted about the lack of agreement in U.S. Congress over the country’s debt ceiling with American politics seemingly as partisan as ever.   

Now, the 10-year U.S. Treasury bond yields just 1.50%. This is after President Joe Biden stated late Monday that it was impossible to guarantee that the government would not exceed $28.4 trillion in debt. As the United States risks a historic default within the next two weeks.

A spate of data from recent times has helped the dollar. These data have shown a picture that a pandemic is fading and an economy recovering, which fuels expectations that the Federal Reserve will tighten its monetary policy sooner rather than anticipated.

With this in mind, the focus for most of this week will be on Friday’s release, with the Fed undoubtedly looking for a stronger recovery in the labor market following August’s disappointing release.

The labor market is continuing to improve, as this release of labor data forecasts that 488,000 new jobs will be added to the September job market. This figure represents an increase from the 235,000 added jobs the month before.

“Almost everyone likes the greenback right now, and it’s easy to explain why: investors are waiting for the U.S. Fed to back up its words about an early reduction of the Quantitative Easing (QE) program with actions,” said Dmitriy Gurkovskiy, an analyst at RoboForex.

Other than that, on Wednesday the central bank of a is due to announce its latest policy decision. The expected hike is 25 basis points. Friday will see the announcement. Central banks of both central and eastern Europe are expected to be among the first to raise interest rates.


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