Dollar on the Up Analysis – 13th January 2021

Dollar Index Trades Higher

Stabilising U.S. Treasury yields helped the dollar trade back in positive territory on Wednesday, though investors remained bearish on the currency’s near-term prospects.

Benchmark 10-year Treasury yields fell more than 6 basis points from a 10-month high hit on Tuesday, briefly snuffing out a three-day winning streak for the dollar. They last traded 2 basis points lower at 1.12%, helping the currency trade 0.1% higher against its peers.

The euro, having earlier made its sharpest daily gain against the greenback, lost ground to trade 0.15% lower on the day at $1.2189.

Sterling bucked the trend and strengthened against the dollar to $1.37, having been boosted the previous day by the Bank of England governor talking down the prospect of negative interest rates.

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

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

Investors maintained their bearish stance on the greenback.

Today’s Events

December U.S. inflation figures are also due at 15.30 GMT+2, with expectations for annual core CPI to hold steady at 1.6%.

Federal Reserve Board Governor Lael Brainard and Vice Chair Richard Clarida are also due to speak on Wednesday and the Fed issues its “Beige Book” of economic indicators at 21.00 GMT+2.

Fed Chair Jerome Powell is due to speak on Thursday.

These events may have an effect on USD crosses and Gold.

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