U.S Dollar Mixed as 10-Year Treasury Yields Inch Near 2%
The U.S dollar was mixed against its major trading partners early Thursday amidst rising U.S Treasury yields and growing expectations of an aggressive interest rate hike by the Federal Reserve in March.
Today, 10-year U.S Treasury yields inch near the psychologically-important 2%, according to market data. The Bank of England decided to raise its policy rate by another 25-basis points Thursday. The European Central Bank will release its post-meeting statement, where no change to rates is expected.
A quick summary of foreign exchange action heading into Thursday shows that USD-CAD rose to 1.2709 from 1.2668 at the Wednesday US close and 1.2681 a day earlier. There are no Canadian data on Thursday’s schedule, so the focus turns to Friday’s monthly employment report, which will be released at the same time as the US version.
The Fed and Bank of Canada are both on track for rate increases at their next meetings in March, with BoC officials suggesting Wednesday that balance sheet reduction could follow shortly after. USD-JPY rebounded to 114.8198 from 114.4379 at the Wednesday US close and 114.3554 a day earlier, halting the slide seen for most of the week.
The Japanese flash PMI index was revised modestly higher in data released overnight, but the level remained below the breakeven point, still indicating contraction due to a tightening of COVID-19 restrictions.
GBP-USD surged to 1.3619 from 1.3576 at the Wednesday close, well ahead of the 1.3566 level a day earlier, with most of the gain coming immediately after the Bank of England decision to raise its policy rate for the second straight meeting to contain interest rates, bringing it to 0.50%.
The UK’s services PMI was revised slightly higher, lifting it above the previous month’s level. EUR-USD fell to 1.1289 from 1.1305 at the Wednesday US close and 1.1326 a day earlier. Read: US Dollar Mixed Ahead of PPI, FOMC Statement
The highlight of Thursday’s schedule will be the ECB’s policy announcement, where no change to rates is expected but an update to the forward guidance reflecting inflation pressures is possible after a surprise jump in consumer prices reported on Wednesday and an accelerated rate of producer price gains reported earlier Thursday.
The EU services PMI was revised down overnight but remained above the breakeven point. # Dollar Mixed as U.S 10-Year Treasury Yields Inch Near 2%
