Euro slips to two-week lows as U.S. yields rise

Cornelia Mascio
Gennaio 11, 2021

That has pushed the yield on the benchmark 10-year US debt up more than 20 basis points to 1.1187% this year, which helped the dollar to a one-month high of 104.095 yen Monday as better rates gave pause to some dollar shorts.

With the Fed reluctant to purchase more longer-dated bonds, 10-year Treasury yields jumped nearly 20 basis points last week to 1.12%, the biggest weekly rise since June. It rose 0.1% to 90.418 on Monday. EUROSTOXX 50 futures eased 0.1% and FTSE futures were flat.

Spot gold fell as low as $1,828.36 and was last down 3.6% at $1,843.06 per ounce at 2:45 p.m. EST (1945 GMT), en route to register its worst week since November.

"I think there's a perception perhaps markets are getting slightly ahead of themselves", Hewson said.

President-elect Joe Biden is due to announce plans for "trillions" in new relief bills this week, much of which will be paid for by increased borrowing.

Australian shares settled lower on Monday as cases of highly transmissible new COVID-19 variants dimmed hopes for a quick economic recovery, with gold miners leading the retreat on bullion sell-offs.

At the same time, the Federal Reserve seems content to put the burden on fiscal policy with Vice President Richard Clarida saying there would be no change anytime soon for the $ 120 billion in debt the Fed buys each. month.

Mark Cabana at BofA warned stimulus could further pressure the dollar and cause Fed tapering to begin later this year.

"An early Fed taper creates upside risks to our year-end 1.5% 10-year Treasury target and supports our longer-term expectations for neutral rates moving towards 3%", he said in a note to clients.

In the worldwide market, gold slumped more than 4% on Friday and silver followed with a near 10% plunge as prospects for a smooth transition of power in Washington and a jump in U.S. Treasury yields hammered the precious complex, according to Reuters.

The poor payroll report will increase interest in U.S. data on inflation, retail sales and consumer sentiment.

The euro pulled back to $1.2170 from a recent top of $1.2349, breaking support around $1.2190. The US dollar also gained to 104.18 yen from a trough of 102.57 hit last week.

Brent crude futures dipped 65 cents to $55.34, while US crude futures lost 41 cents to $51.83 a barrel.

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