Dollar falls as yuan fix lifts risk currencies, Georgia elections in focus
The dollar fell against a basket of major currencies on Tuesday, on the heels of China’s decision to lift its official yuan exchange rate by its highest margin since it abandoned a dollar peg in 2005, while U.S. Senate runoff elections in Georgia were also in focus.
China’s central bank set the official yuan midpoint at 6.4760 per dollar before the market opened, up 1% from the previous fix, the biggest adjustment higher since 2005.
In the offshore market, the yuan strengthened as much as 6.4119 for the first time since mid-June 2018. It started the week at 6.494.
The dollar index fell 0.486% to 89.429. The greenback has fallen in the first two sessions of 2020 after a drop of nearly 7% in 2020 to reach levels not seen since April 2018.
The euro was up 0.42% to $1.23 while the Japanese yen strengthened 0.45% versus the greenback at 102.64 per dollar.
Sterling was last trading at $1.363, up 0.45%, having been whipsawed by a surge in infections of a fast-spreading new coronavirus variant in the UK, with the government calling for a third national lockdown in an effort to curb the spread.
It slid 0.73% on Monday, the most since Dec. 10, after earlier rising to $1.3703, a level not seen since May 2018.
Bitcoin traded at $34,077.96 , up 6.41%, following a roller-coaster ride that took it to a record high of $34,800 on Sunday and a subsequent tumble to as low as $27,734 the following session.
The yuan could trade at around 6.25 by the third quarter of 2021, strategist says
10-year Treasury yield jumps above 0.96% ahead of Georgia Senate runoffs
Long-maturity Treasury yields climbed on Tuesday, ahead of Georgia’s runoff elections, which will determine whether Republicans keep hold of the Senate.
The yield on the benchmark 10-year Treasury note popped 5 basis points to 0.964%, while the yield on the 30-year Treasury bond moved up 6 basis points to 1.721%. Yields move inversely to prices.
Treasury yields climbed ahead of the pivotal runoff vote. If the Democrats gain control of the Senate some fear this could mean higher tax rates, but it could also lead to a bigger and faster government stimulus spending package.
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