A look at the day ahead in U.S. and global markets from Mike Dolan
Helped by a backup in U.S. Treasury yields, the dollar has rediscovered its mojo ahead of a wave of overseas interest rate cuts this week, with China’s markets giving only a hesitant welcome to Beijing’s new policy orientation.
As Treasury debt sales resume in earnest later on Tuesday and Wednesday’s consumer price inflation report is awaited, 10-year yields have nudged back above 4.2%.
That follows a three-week swoon of more than 30 basis points from post-election highs and a puncturing of bond volatility gauges to their lowest in more than two years.
The foothold for yields helped lift the dollar too, especially against currencies facing another round of central bank easing this week.
The greenback hit its highest against the Canadian dollar since April 2020, as traders mull whether the Bank of Canada will cut its main interest rate by another 50bps on Wednesday – not least as U.S. President-elect Donald Trump’s tariff threats hit sentiment there.
But with the European Central Bank and Swiss National Bank also expected to cut rates again this week, the euro and Swiss franc were also back under pressure.
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