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Yield rise - Dollar dips as Biden transition, vaccines boost risk appetite

The U.S. dollar fell on Tuesday as risk appetite improved after U.S. President Donald Trump accepted the transition to a Joe Biden presidency and on optimism that COVID-19 vaccines are close to being rolled out.

Trump acknowledged that the head of the General Services Administration should go ahead with a transition to a government led by President-elect Biden, despite plans to continue with legal challenges to election results.

The dollar index was last down 0.31% at 92.214, having reached a three-month low of 92.013 on Monday. It is holding above a key technical support at around 92, which analysts say would lead to further declines if broken.

The euro gained 0.35% to $1.1884 and the dollar gained 0.08% to 104.56 against the Japanese yen.

Riskier currencies outperformed with the Australian dollar last up 0.93% at $0.7354, after earlier touching an almost three-month high of $0.7367.

The New Zealand dollar hit a more than two-year high of $0.7005 as investors scaled back wagers of more policy easing by the country’s central bank, and was last up 0.72% on the day at $0.6972.

Bitcoin gained more than 4% to $19,139 and is approaching its record high of $19,666 from December 2017.

Democratic allies to the Biden campaign said former Federal Reserve Chair Janet Yellen is expected to be nominated as Treasury Secretary, which has increased expectations of large fiscal stimulus.

She has called for increased government spending to lift the economy out of a coronavirus-induced recession.

That said, Yellen has also expressed concerns about rapidly rising U.S. debt and the worsening budget deficit.

Data on Tuesday showed that U.S. consumer confidence fell more than expected in November amid a widespread resurgence in new COVID-19 infections and business restrictions, reinforcing expectations for a sharp slowdown in economic growth in the fourth quarter.

10-year Treasury yield rises to its highest level in a week

U.S. Treasury yields advanced on Tuesday after President Donald Trump accepted that President-elect Joe Biden’s transition into the White House must begin.

The yield on the benchmark 10-year Treasury note rose to 0.875%, its highest level since Nov. 18, while the yield on the 30-year Treasury bond moved up to 1.573%. Yields move inversely to prices.

Reference: CNBC