Dollar dips as Treasury yields subdued
The dollar edged lower on Monday as Treasury yields were moribund and investors looked ahead to European and U.S. central bank meetings.
Friday’s U.S. jobs data had put pressure on the dollar as investors bet that jobs growth was not strong enough to raise expectations for the U.S. Federal Reserve to tighten its monetary policy.
That move continued on Monday, with Treasury yields remaining subdued after Friday’s drop, reducing demand for the U.S. currency.
“Treasury yields edged slightly higher on the session, though remained well below levels seen before the employment report. This was the likely driver of USD weakness on Monday,” said Ronald Simpson, managing director, global currency analysis at Action Economics.
The dollar index was down 0.21% at 89.946 while the euro gained 0.23% to $1.2194. The dollar also fell 0.23% to 109.26 Japanese yen.
Benchmark 10-year Treasury yields were last at 1.569%. They fell to 1.560%, from 1.628%, on Friday.
“At this point it looks like the market really wants to be short dollars. To us it suggests there’s a risk chasing this move. It’s a crowded position. You’ve already got a sizeable chunk of the market that’s net short U.S. dollars so if feels like we need a shakeout of those positions,” said Bipan Rai, North America head of FX strategy at CIBC Capital Markets.
Market participants will also be looking at U.S. inflation data and the European Central Bank meeting, both on Thursday.
Reference: CNBC
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