Dollar Flying high with Treasury Yields
The US dollar took yet another step higher yesterday alongside US treasury yields as investors continue to adjust to the prospect of rates remaining higher for longer stateside. In contrast to recent moves, the major stock indices in the US had a mixed day with the Nasdaq driving higher by 0.67%, the S&P finishing flat and the Dow dropping 0.22%. Yields increased across the board with the benchmark 10-year hitting its highest level since 2007, up to 4.7% and the long-term 30-year rising 10bps to trade at 4.81%, its highest level since 2010. Gold hit 7-month lows as it sunk over 4% in the last week and the dollar rose against the majors, although couldn’t break through the 150 barrier against the Yen.
Buy Dollars Wear Diamonds
The dollar bull train continued unabated again in trading yesterday as investors adjusted to more hawkish rhetoric from FOMC members. Michelle Bowman reiterated her previous calls for more rate hikes and previously New York Fed Governor John Williams advised that interest rates should stay high for some time. Whereas the market is not pricing in many more hikes and even one more is in doubt, it is now looking to fully embrace the prospect of rates remaining elevated for longer and that is what has led to the recent resurgence in the greenback. While inflation data remains sticky and for traders this week, that translates into a strong job market, then expect the dollar to keep on rolling.
Central Banks and Jobs in Focus Today
The focus for the APAC trading session will be firmly on the Australian market as the Reserve Bank of Australia is set to give the market its latest rate update and with no change expected, the statement could cause some volatility. The European session sees the release of the Swiss CPI data and with the SNB having some of the lowest rates, expect some moves if we have a print-off the expected 0% change. The US session has the first jobs numbers of the week in the form of the JOLTS Job Openings with 8.81m the expected outcome, anything further north than that could see a continuation in the trend that has been building over the last week.
