Even as US Treasury yields maintain Monday’s losses, the DXY depicts a tentative comeback.
Market mood is dwindling as a result of covid troubles and contradictory Fed statements ahead of the US NFP.
Traders are kept at bay by a light calendar, and quarter-end positioning adds to the filtering.
In early Tuesday trading, the US dollar index (DXY) edged higher to 91.92, up 0.05 percent intraday. The greenback index versus six major currencies saw its biggest daily gains the day before, but recent trade appears to be influenced by the recovery of US Treasury yields.
After registering the largest daily losses since June 18, the US 10-year Treasury yield gains one basis point (bp) to roughly 1.48 percent. Stock futures are being weighed down by higher bond rates, which signal cautious optimism in the midst of a quiet market session.
The latest coronavirus (COVID-19) difficulties, as well as speculation over US President Joe Biden’s infrastructure investment, are driving the moves. The market’s mood is also influenced by pre-NFP concerns and quarter-end positioning.
Australia has announced a broader range of covid-led restrictions, while the UK has had the largest number of illnesses since January 30. Indonesia, Malaysia, and Thailand are also concerned about the recent increase in COVID-19 numbers and the virus strain.
The cautiously optimistic Fedspeak was bolstered by a drop in the Dallas Fed manufacturing index to 31.1 from 36.8 predicted and 34.9 before. “The Fed has made substantial more progress against the inflation goal,” Thomas Barkin, President of the Richmond Federal Reserve Bank, stated on Monday. Supply chain mismatches that contribute to greater inflation, on the other hand, are projected to be temporary, according to Federal Reserve Vice Chairman for Supervision Randal Quarles.
It’s worth mentioning that ECB policymaker Robert Holzmann’s comments the day before, implying no room for monetary policy tweaks, boosted the US dollar.
Looking ahead, a light schedule keeps risk catalysts in control, so Fedspeak, as well as covid news, should be monitored for new energy.
To keep buyers encouraged, a 12-day ascending trend line joins the 10-day SMA near 91.75.
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