Dollar Strengthens On Rising U.S. Treasury Yields
The U.S. dollar was higher against its key counterparts in the
European session on Wednesday, as the U.S. treasury yields advanced
after Senate Democrats voted to push through the Covid-19 rescue
package without any Republican support.
The Senate voted 50-49 to begin the budget reconciliation
process on Tuesday.
The move enables the Democrats to pass coronavirus relief
legislation without any Republican votes.
The prospect for fiscal stimulus triggered a selloff in U.S.
Treasuries, lifting the yields.
Investors cheered news that former European Central Bank chief
Mario Draghi has been asked to form a technocratic government to
solve the ongoing political crisis in Italy.
Prime Minister Giuseppe Conte resigned on January 26 after
Italia Viva party withdrew its support from the coalition
Data from the payroll processor ADP showed that U.S. private
sector employment increased much more than expected in January.
ADP said private sector employment jumped by 174,000 jobs in
January after decreasing by a revised 78,000 jobs in December.
Economists had expected employment to rise by 49,000 jobs
compared to the loss of 123,000 jobs originally reported for the
The currency held steady against its major rivals in the Asian
session, with the exception of the pound.
The greenback rose to 0.9001 against the franc, its strongest
since December 2. At yesterday's trading close, the pair was quoted
at 0.8972. The greenback may possibly challenge resistance around
the 0.92 level.
The greenback climbed to more than a 2-month high of 1.2005
against the euro, compared to Tuesday's closing value of 1.2043.
The greenback is likely to test resistance around the 1.18
Flash data from Eurostat showed that Eurozone consumer prices
increased for the first time in six months in January.
The harmonized index of consumer prices climbed 0.9 percent
year-on-year in January, reversing a 0.3 percent fall in December.
Economists had forecast an annual growth of 0.5 percent.
The greenback reversed from an early low of 1.3683 against the
pound, rising to 1.3619. The pound-greenback pair had ended
yesterday's trading session at 1.3667. The greenback is seen
finding resistance around the 1.35 mark.
Final survey results from IHS Markit showed that the UK service
sector contracted at the fastest pace in eight months in January
due to the impact of restrictions related to the Covid-19 pandemic
on trade and temporary business closures amid the third national
The Markit/Chartered Institute of Procurement & Supply
services Purchasing Managers' Index plunged to 41.2 from 50.4 in
December. A score below 50 indicates contraction. The flash score
The greenback bounced off to 1.2811 against the loonie and
0.7191 against the kiwi, from its prior 2-day low of 1.2763 and a
5-day low of 0.7226, respectively. The next possible resistance for
the greenback is seen around 1.34 against the loonie and 0.70
against the kiwi.
In contrast, the greenback held steady against the aussie, after
having retreated to 0.7624 earlier in the session. The greenback
was worth 0.7607 per aussie at Tuesday's New York session
The U.S. currency ticked up to 105.10 against the yen and held
steady thereafter. The pair had closed Tuesday's deals at
The U.S. ISM non-manufacturing PMI for January will be released
at 10:00 am ET.