MTS Help Center

· Dollar Up, Investors Await Powell, Yellen Congressional Testimony

The dollar was up on Tuesday morning in Asia but just below recent highs as investors gauge how far top U.S. policymakers will allow U.S. bond yields to climb.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.12% to 91.847 by 12:26 AM ET (4:26 AM GMT).

The USD/JPY pair inched down 0.09% to 108.73.

The AUD/USD pair was down 0.44% to 0.7710 and the NZD/USD pair fell 0.98% to 0.7092. The NZD fell against major currencies after the government introduced steps to rein in soaring property prices, which dampened speculation that the Reserve Bank of New Zealand would raise interest rates.

The USD/CNY pair inched up 0.04% to 6.5098 and the GBP/USD pair edged down 0.13% to 1.3845.

The dollar index has gained 2% so far during the first quarter of 2021, boosted by the rollout of COVID-19 vaccines in the U.S. and the signing of a $1.9 stimulus package into law earlier in the month. Hopes for economic recovery also drove U.S. bond yields up and drew investors to the greenback.

Also adding to the dollar’s attraction was the U.S. Federal Reserve’s recent, perceived tolerance of rising bond yields.

“U.S. bond yields could rise further as the market may try to find out where the pain threshold for the Fed is,” MUFG Bank chief currency analyst Minori Uchida told Reuters.

Ten-year U.S. bond yields eased to 1.684% after climbing up to 1.754% during the previous week.

Investors will be focused on the joint congressional testimony by Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen later in the day.

“The market is interested in how far U.S. bond yields will rise. While top Fed officials have said they will keep interest rates low through 2023, there could be dissenting voices,” Daiwa Securities senior strategist Yukio Ishizuki told Reuters.

Investors also looked to the U.S. Treasury’s auctions of two-, five- and seven-year debt later in the week.

Meanwhile, the Turkish lira traded at 7.7980 per dollar, regaining some stability after Monday’s steep 7.5% dive. The dive came after President Recep Tayyip Erdoğan replaced hawkish central bank governor Naci Agbal with Sahap Kavcioglu on Saturday.

However, investor confidence in emerging market currencies was little shaken by Erdoğan’s firing of his third central bank governor since 2019, which was considered to hold no wider risk.

In cryptocurrencies, bitcoin was at $54,549 after falling almost 5% on Monday to trade near the previous week’s low of $53,221.

· Treasury yields haven’t peaked yet as experts say 10-year rate could hit 2%

U.S. 10-year Treasury yield could inch higher, but that may not pose a risk to financial markets, according to Jurrien Timmer of Fidelity Investments.

“I think yields could push a little higher. So far, they’ve (got) up to about 1.75%. I have a simple bond model that suggests 2% should be the upper limit,” Timmer, who is the director of global macro at the firm, told CNBC’s “Squawk Box Asia” on Tuesday.

· U.S. Treasury auctions to test demand after volatile trading

Demand for U.S. Treasuries will be tested this week as $183 billion of notes are due to be auctioned, with one seven-year note sale likely to be closely watched after an auction of that maturity stumbled last month.

· Biden infrastructure, jobs spending push could hit $4 trillion: source

President Joe Biden will be briefed by advisers this week on infrastructure, climate and jobs proposals being considered by the White House that could collectively cost as much as $4 trillion, according to people familiar with discussions.

· U.S. stimulus will cause ‘positive spillovers’ in Europe, ECB chief economist says

The $1.9 trillion coronavirus relief package in the United States is a “significant engine for the world economy” and will have positive spillover effects in the euro zone, the chief economist of the European Central Bank told CNBC.

· Premier Li meets with foreign magnates attending high-level forum, talking about economic growth rate vs quality

Chinese Premier Li Keqiang met with overseas participants to the China Development Forum (CDF) 2021 via video link on Monday, talking about the relationship between Chinese economy's growth rate and quality.

Attending the virtual meeting at the Great Hall of the People in Beijing, Li said that setting this year's GDP growth goal at above 6 percent takes into account the current economic growth that is still in recovery mode. He also highlighted the need for a steady alignment with the goals for the next two years, in response to a question about the relationship between growth rate and quality, according to a statement on the website of the central government.

A growth rate going north of 6 percent is not low, with possibilities left open, and it could be even higher in practical operation, the premier stated, noting that "we're not setting plans, but guiding expectations."

· West sanctions China over Xinjiang abuses, Beijing hits back at EU

The United States, the European Union, Britain and Canada imposed sanctions on Chinese officials on Monday for human rights abuses in Xinjiang, the first such coordinated Western action against Beijing under new U.S. President Joe Biden.

· China denies all accusations of abuse.

· Russia and China push for U.N summit, lash out at West

Russia and China said on Tuesday they wanted a summit of permanent members of the U.N. Security Council amid what they called heightened political turbulence, with Moscow saying they believed the United States was acting in a destructive way.

· Odisha warns of COVID-19 vaccine shortage, immunisation halt

The eastern Indian state of Odisha might have to stop its coronavirus immunisation drive for four days starting at the end of March because of a shortage of vaccine doses, according to a letter to the federal government reviewed by Reuters.

· England slaps new 5,000 pound fine on travel abroad

Fines of 5,000 pounds ($6,900) will be introduced from next week for people from England who try to travel abroad without good reason under new COVID-19 laws which last until the end of June.

· Germany's Merkel banks on Easter circuit-breaker to combat 'new pandemic'

Germany is extending its lockdown until April 18 and calling on citizens to stay at home for five days over the Easter holidays to try to break a third wave of the COVID-19 pandemic, Chancellor Angela Merkel said early on Tuesday.

· U.S. health body questions robustness of AstraZeneca's COVID-19 vaccine trial data

The concerns throw into question whether the British drugmaker can seek U.S. emergency use authorization for the vaccine in the coming weeks as planned, and come just one day after interim data from the trial had shown better-than-expected results.

· Japan unveils steps to back financing at bigger firms hit by pandemic

Japan's government on Tuesday unveiled measures to help midsize and large companies boost capital funds, officials said, a step aimed at backing mainly restaurants and lodging businesses hit hard by coronavirus restrictions.

· Europe facing difficult quarter but ECB will do its part: ECB's Lane

Europe is facing a difficult second quarter as coronavirus infections rise and governments reimpose lockdown measures, but the European Central Bank will do its part to keep borrowing costs ultra low, ECB chief economist Philip Lane said on Tuesday.

· Covid restrictions are being eased 'once and for all', Boris Johnson says

· UK jobless rate unexpectedly drops to 5.0%

· Myanmar military spokesman "sorry" for loss of lives of protesters

· Philippines protests 'threatening presence' of Chinese vessels in disputed waters

The Philippines complained to China on Monday about what it described as the “swarming and threatening presence” of Chinese vessels in disputed waters in the South China Sea and demanded they be withdrawn from the area.

· Singapore core inflation turns positive after over a year, up 0.2% in February

SINGAPORE'S core inflation in February returned to positive territory for the first time after over a year, due to an increase in services costs and higher food inflation, according to a joint statement from the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) on Tuesday.

Core inflation, which excludes accommodation and private transport, rose 0.2 per cent year on year in February, lifting from the -0.2 per cent seen in January.

· Thailand: BoT expected to keep rates on hold – UOB

Lee Sue Ann, Economist at UOB Group, believes the Bank of Thailand (BoT) would leave the reference rate unchanged at its week on Wednesday.

Key Quotes

“We keep our call for BoT to leave its benchmark rate unchanged at 0.50% for the whole of 2021.”

“That said, Thailand’s economic growth is likely to be uneven, amid pronounced downside risks should COVID-19 worsens.”

“Also, should macroeconomic fundamentals stay unexpectedly subdued into 2H21, a 25bps rate cut could materialize then.”

Reference: Reuters,CNBC,Investing,FXStreet