Dollar holds ground above two-week trough as US yields power up

Economies.com
2024-02-12 11:24AM UTC

Dollar rose in European trade on Monday against a basket of major rivals, holding ground above two-week lows hit earlier in the Asian session.

 

The gains came as US 10-year treasury yields rally as well, as prospects of early Fed rate cuts this year fade.

 

The Index

 

The dollar index rose 0.1% to 104.18, with a two-week low at 103.90, after closing down 0.1% on Friday, the third loss in four days on profit-taking off three-month highs at 104.60. 

 

US Yields 

 

US 10-year treasury yields rose 0.3% on Monday, extending gains for the fourth straight session and almost hitting three-week highs at 4.195%, boosting dollar demand. 

 

Yields added 15 basis points last week as investors push out the likely data of the first Fed rate cut this year following strong US data and bullish remarks by Fed officials. 

 

Several Fed officials, including Fed Chair Jerome Powell, said they need to see more evidence of sustainably lower inflation before cutting rates. 

 

 US Rates

 

Current pricing for a 0.25% Fed interest rate cut in March stands at just 15%, while odds for such a cut in May stood at 60%. 

 

Inflation Data

 

Now traders await important US inflation data tomorrow for January to gauge the likely path ahead for US monetary policies. 

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