Dollar gives up 3-week high on profit-taking

Daniel Fowler
January 13, 2021

Yields move inversely with prices.

House Democrats on Monday introduced an impeachment article against outgoing U.S. President Donald Trump for inciting a host of his supporters who invaded the U.S. Capitol last week. Rising coronavirus cases across Europe and China dragged down commodity stocks. Platinum rose 0.3% to $1,079.21, while palladium eased 0.2% to $2,388.78.

Stabilising U.S. Treasury yields helped the dollar trade back in positive territory on Wednesday, though investors remained bearish on the currency's near-term prospects.

Expectations of a multitrillion-dollar stimulus plan and the belief the Federal Reserve will not act to counter rising interest rates, along with new Treasury supply are helping yields rise, said Gennadiy Goldberg, an interest rate strategist at TD Securities in NY.

Yields on the benchmark Treasury note dropped to 1.110% in early trade, down from an nearly 10-month high of 1.187% on Tuesday.

Gold steadied after the longest run of daily declines since November as investors weighed the impact of a stronger dollar and rise in Treasury yields against expectations for further massive stimulus.

The view that inflation will return "seems to ignore what is happening in the commercial real estate market (and the price bubble set to burst in the residential housing market)", wrote David Rosenberg, chief economist and strategist at the Toronto-based Rosenberg Research.

Rain and cold temperatures will greet you as you start your week
Every weekday excluding Friday will be sunny with highs in the low to mid 40s, according to the National Weather Service . High-profile vehicles could be tipped in the windy corridors of I 90 and US Highway 191 from Big Timber to Harlowton.

The dollar fell through 104 Japanese yen to trade at 103.63 yen on Wednesday and the Chinese yuan also held gains to begin the day at a one-week high in offshore trade.

The dollar index rose 0.183%, with the euro down 0.47% to $1.216.

Morgan Stanley said it had moved to neutral from bullish on emerging market currencies as its forecasts had been hit and factors that kept the US dollar on the back foot may not be sustained.

Prices fell as much as 4.4 per cent on Friday.

IG Market analyst Kyle Rodda said, "the big picture is it's still a very constructive year for gold".

US crude recently fell 0.31% to $52.08 per barrel and Brent was at $55.51, down 0.86% on the day. On Monday, prices touched their lowest since December 2.

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