Growth in US Treasury yields pushes dollar up again


26 February 2021

Anna Zaitseva, analyst, FINAM Group

On Friday, February 26, EUR / USD is down 0.15% and is trading at 1.21520, while the DXY dollar index is up 0.28% at 90.388. A day earlier, the single European currency rose to the level of 1.22425 in tandem with the dollar, but at the end of the trading session it dropped to 1.21817. At the same time, the DXY index declined during the day to 89.675, but closed at 90.135.

The American currency was supported by a sharp rise in the yields of US Treasury bonds. Thus, the yield on 10-year government bonds jumped yesterday to 1.53%, and on 30-year bonds – to 2.298%, which was the highest values ​​in the last 12 months.

The growth in yields is largely due to expectations of a faster recovery of the American economy as a result of the use of large-scale monetary and fiscal stimulus programs. At the same time, some economists fear a significant overheating of the economy after the use of a new stimulus package in the amount of $ 1.9 trillion, which could lead to a sharp rise in inflation. In turn, this will create preconditions for an earlier rollback of monetary support measures by the FRS, although the regulator continues to assure market participants that the issue of raising rates will not be relevant for a very long time.

As for macroeconomic statistics, the March data on the GfK consumer confidence index was released in Germany yesterday. Thus, the value of the indicator increased by 2.6 percentage points, to -12.9 points, which turned out to be higher than the consensus forecast of -14.3 points.

In the eurozone, the final data on the consumer confidence index for February became known. The final estimate of the indicator did not change in comparison with the preliminary one and amounted to -14.8 points against -15.5 points in January. In addition, data on the index of economic sentiment were published in the eurozone: in February, the indicator rose by 1.9 points, to 93.4 points, while analysts had expected an increase to 92 points.

In the US, the second estimate of GDP for the IV quarter was published. According to the latest data, gross output grew in the period under review by 4.1% (yoy), which is 0.1 pp below the preliminary estimate. Also in the States, data on orders for durable goods became known: in January, the indicator increased by 3.4% (m / m) against an increase of 1.2% (m / m) in December and the consensus forecast of +1.1 % (m / m).

A pleasant surprise was the data on the number of initial applications for unemployment benefits in the United States. At the end of the week ended February 20, the value of the indicator was 730 thousand, which was the lowest value in the last three months and turned out to be better than the consensus forecast of 838 thousand.

Today you should pay attention to the publication in the United States of data on income and expenses of individuals, the volume of inventories in wholesale warehouses, the trade balance of goods, the index of business activity in Chicago, as well as a number of indicators from the University of Michigan.

After an unsuccessful attempt to overcome the level of 1.2200, the EUR / USD rate returned to the level of 1.2150. Stochastic lines are located near the overbought zone in a favorable position for selling, which speaks in favor of a downward movement for the instrument in the short term.

This information is not investment advice.

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