Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Yields Resume Rise, But U.S. Dollar Is Slow To Follow

By Kathy LienCurrenciesMar 03, 2021 22:26
Yields Resume Rise, But U.S. Dollar Is Slow To Follow
By Kathy Lien   |  Mar 03, 2021 22:26
Saved. See Saved Items.
This article has already been saved in your Saved Items
U.S. Treasury yields came roaring back on Wednesday after a brief consolidation at the start of the week. The nearly 6% rise in 10-year rates drove the U.S. dollar higher against most major currencies. However, there’s no doubt that the U.S. dollar rally is losing momentum as the euro settles with modest losses and sterling outperforms the greenback. U.S. data was also disappointing, raising concerns for Friday’s jobs report. According to private payroll provider ADP (NASDAQ:ADP), 117,000 new hires were made in February, significantly less than the 177,000 forecast. Service sector activity also slowed, with the ISM index dropping to 55.3 from 58.7. The employment component of the report, which has strong correlation with NFPs dropped to 52.7 from 55.2. Economists were hoping that February would be a better month for jobs, and while we still expect nonfarm payrolls to rise above 100,000, today’s reports suggests that it may fall short of the 180,000 forecast. The prospect of weaker NFPs could weigh on the U.S. dollar, especially USD/JPY whose latest rally took the pair right up to the 100-week SMA 107.25, an important resistance level.
The reflation trade should remain a big story. There’s room for more upside as vaccines are just being rolled out and the stimulus package is in the works. When all of these pieces fall into place, the reflation trade could gain momentum. Yields can’t rise forever, but even with some correction, the path of least resistance should be higher. The U.S. economy isn’t doing poorly – according to the Beige Book, economic activity expanded modestly from January to February. 
In Europe, the euro ended the day unchanged versus the U.S. dollar. The ECB sees no need to react drastically to the rise in bond yields, according to a report. This sentiment echoed by ECB member Jens Weidmann, but he also feels that the central bank could adjust the pace of PEPP purchases if needed. With retail sales in Germany slowing and the composite PMI index revised lower, the rise in yields is a bigger problem for the Eurozone than the U.S. EUR/USD has been incredibly resilient and could rally if NFPs miss but in the long run, the EZ lags the recovery, which could become a problem for the currency.
Sterling traders cheered the UK government’s decision to extend furlough payments until the end of September and Chancellor Rishi Sunak’s outlook for a swifter and more sustained recovery. Although PMIs were revised lower, the UK’s aggressive vaccine rollout efforts will pay dividends for the economy in the future. 
Meanwhile, a strong recovery in oil prices along with this week’s better-than-expected GDP numbers helped the Canadian dollar hold onto its gains against the greenback. The Australian and New Zealand dollars weren’t so lucky. AUD shrugged off better GDP numbers in favor of weaker PMIs. Retail sales and the trade balance are due for release this evening. The New Zealand dollar initially saw some strength after the sharp rise in dairy prices but succumbed to U.S. dollar gains.
Yields Resume Rise, But U.S. Dollar Is Slow To Follow

Related Articles

Andey Goilov
EUR/USD Remains Near the Lows By Andey Goilov - May 16, 2022

Early in another week of May, EUR/USD remains weak; the asset is consolidating around 1.0400, which is very close to the 2-year lows at 1.0348 reached last Friday. Market players...

Yields Resume Rise, But U.S. Dollar Is Slow To Follow

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Ashley Webb
Ashley Webb Mar 04, 2021 0:44
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Keeping us well informed great stuff thanks Kathy
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email