Dollar won as Treasury yield stabilizes

LONDON (Reuters) – The U.S. Treasury’s stable output helped the dollar trade back in a positive range on Wednesday, although investors remained bearish on the near-term near-term term.

Benchmark’s 10-year financial yield fell more than 6 basis points since hitting a 10-month high Tuesday, triggering a three-day winning streak for the dollar. They eventually traded 2 basis points lower at 1.12%, helping the currency trade 0.1% higher against its peers. [US/]

The euro, after gaining its strongest daily gain against the green, lost ground for 0.15% lower trading on the day at $ 1.2189.

Sterling added to the move and strengthened against the dollar to $ 1.37, after rising the previous day with a Bank of England governor speaking down the expectation of negative interest rates. [GBP/]

Australian and New Zealand dollars fell 0.3% and 0.4% respectively, with the Aussie hitting $ 0.7745 and the kiwi at $ 0.7195. [AUD/]

The pullback in yield pushed the dollar below 104 Japanese yen to trade at 103.79 yen.

Investors maintained their bearish stance on the green.

“We continue to think that the decline of the backdrop should remain as it is while a global recovery is expected,” said Mark Haefele, chief investment officer at UBS Global Wealth Management in in London.

The dollar index was 0.1% higher at 90.14 after falling 0.5% on Tuesday and not far above last week’s nearly three-year low of 89.206.

“We believe there are two main reasons for that (dollar not weakening now),” said Calvin Tse, CEO of G10 FX North America at CitiFX.

“Not only have U.S. output, especially at the back, moved higher, they have fired higher. With the U.S., yields burning higher, it actually does two things: 1) it encourages more inflows into U.S. buying rate products U.S. and 2) rates are Moving output tends to be good for high EM FX beta. ”

U.S. market sentiment has led to much higher output this year and halted the dollar’s ​​decline with Democrats taking control of U.S. Congress at elections in Georgia this week. went.

Investors expect that this return will bring large sums in government loans to fund large spending incentive plans and have found that higher US rates could make the dollar more attractive.

Mixed signals from some members of the U.S. Federal Reserve on how long a policy can remain so appropriate have also been dragged on finances.

However, strong demand for a $ 38 billion 10-year auction overnight and comments from Boston Fed President Eric Rosengren and Kansas City Fed President Esther George have allayed some of those concerns on Fed’s busy list of speakers .

U.S. inflation figures in December are also due at 1330 GMT, with annual base CPI expected to remain stable at 1.6%.

Later Wednesday St. Louis Reserve Bank President James Bullard will participate in a discussion on monetary policy at the Next Reuters Virtual Forum at 1430 GMT.

Federal Reserve Board Governor Lael Brainard and Vice Chairman Richard Clarida are expected to speak on Wednesday and the Fed will issue the “Beige Book” of economic signals at 1900 GMT. Fed Chairman Jerome Powell is expected to speak Thursday.