FOREX-U.S. dollar rises, lifted by higher Treasury yields

BY Reuters | ECONOMIC | 09/27/21 10:14 AM EDT
       * Dollar rises to nearly 3-month high vs yen
    * Euro falls after German elections
    * Focus on Fed speakers this week

 (Recasts, adds new comment, FX table, NEW YORK dateline, byline, updates prices)
    By Gertrude Chavez-Dreyfuss and Ritvik Carvalho
    NEW YORK/LONDON, Sept 27 (Reuters) - The U.S. dollar gained for a second straight session on Monday,
bolstered by the rise in Treasury yields ahead of a slew of Federal Reserve speakers this week who could
reinforce expectations of the start of asset purchase tapering before the end of the year.
    U.S. benchmark 10-year Treasury yields hit a three-month high of $1.516%.
    Fed speakers will be in focus this week, led by Chair Jerome Powell, who will join Treasury Secretary
Janet Yellen in speaking before Congress on Tuesday.
    The dollar index, which measures the U.S. currency against six major rivals, rose 0.2% to 93.442.
    The greeback also extended gains after data showed new orders and shipments of key U.S.-made capital
goods increased solidly in August, rising 0.5% in August amid strong demand for computers and electronic
products.
    But the market has been more focused on the U.S. Treasury market.
    U.S. yields climbed to their highest since late June in anticipation of tighter U.S. monetary policy
after the Fed announced last week that it may start tapering stimulus as soon as November and flagged
interest rate increases may follow sooner than expected.
    "Yields are higher because there is a stronger belief in markets that the Fed will choreograph a
tapering move before the year ends," said Juan Perez, FX strategist and trader at Tempus Inc in Washington.
    "Nevertheless, there are too many items to really have a clear picture of anything at the moment. One
thing is clear is the dollar was a winner from the slowdown that the Delta variant caused, which was both
physical and psychological and diminished the excitement that was built during the second quarter," he
added.
    The euro fell 0.2% against the dollar to $1.1692.
    Moves in the currency pair largely ignored developments in German elections at the weekend, with the
Social Democrats projected to narrowly defeat the CDU/CSU conservative bloc.
    The European Central Bank, meanwhile, hosts an annual forum on Tuesday and Wednesday, with not only ECB
President Christine Lagarde speaking to open day one, but also joining a panel discussion on day two with
Powell, Bank of Japan Governor Haruhiko Kuroda and Bank of England Governor Andrew Bailey.
    The dollar rose 0.2% versus the yen to 110.925, after earlier rising to a near three-month
high. It gained 0.4% versus the Swiss franc to 0.9275 francs.
    The risk-sensitive Australian dollar climbed as fears of widespread market contagion from indebted China
Evergrande Group (EGRNF) receded.
    Rising commodity prices also helped the Aussie and Norway's crown, while the yen was pressured as higher
U.S. yields attracted Japanese investor money.
    Concerns that Evergrande, China's second-largest developer, could default on its $305 billion of debt
have overshadowed trade in recent weeks, but some of those contagion fears are receding.
    The People's Bank of China injected a net 100 billion yuan ($15.5 billion) into the financial system on
Monday, adding to the net 320 billion yuan last week, the most since January.

========================================================
    Currency bid prices at 10:01AM (1401 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change
                                              Session
 Dollar index                 93.3520        93.2680     +0.10%         3.746%        +93.4940    +93.2060
 Euro/Dollar                  $1.1701        $1.1722     -0.17%         -4.23%        +$1.1730    +$1.1685
 Dollar/Yen                   110.8200       110.7350    +0.09%         +7.26%        +111.0600   +110.5300
 Euro/Yen                     129.66         129.75      -0.07%         +2.16%        +129.9300   +129.4900
 Dollar/Swiss                 0.9262         0.9243      +0.22%         +4.70%        +0.9291     +0.9246
 Sterling/Dollar              $1.3716        $1.3670     +0.34%         +0.40%        +$1.3719    +$1.3661
 Dollar/Canadian              1.2649         1.2657      -0.05%         -0.66%        +1.2672     +1.2610
 Aussie/Dollar                $0.7280        $0.7257     +0.33%         -5.35%        +$0.7290    +$0.7250
 Euro/Swiss                   1.0838         1.0831      +0.06%         +0.29%        +1.0864     +1.0835
 Euro/Sterling                0.8529         0.8565      -0.42%         -4.57%        +0.8583     +0.8528
 NZ                           $0.7015        $0.7015     +0.01%         -2.30%        +$0.7033    +$0.6990
 Dollar/Dollar
 Dollar/Norway                8.5930         8.5970      -0.03%         +0.08%        +8.6090     +8.5530
 Euro/Norway                  10.0553        10.0623     -0.07%         -3.93%        +10.0870    +10.0250
 Dollar/Sweden                8.6860         8.6462      +0.27%         +5.97%        +8.7020     +8.6294
 Euro/Sweden                  10.1649        10.1380     +0.27%         +0.88%        +10.1785    +10.1165


 

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Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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