Dollar gains as U.S. yields stabilize, weak data have little impact

Dollar gains as U.S. yields stabilize, weak data have little impact
  • Clock-gray 01:32
  • calendar-gray 27 March 2019

The U.S. dollar inched higher against a basket of currencies on Tuesday as benchmark U.S. 10-year Treasury debt yields rebounded from 15-month lows due to stock gains on Wall Street as investors brushed aside disappointing domestic data on housing starts and consumer confidence, ONAreports quoting Reuters.

The U.S. yield curve remained inverted after interest rates on three-month Treasury bills moved above the yields on 10-year notes for the first time since mid-2007 last Friday.

This market phenomenon, which has preceded every U.S. recession over the past 50 years, triggered a dramatic selloff in stock markets across the globe late last week and a stampede into longer-dated U.S. government debt, putting some pressure on the greenback.

Still, the selling in dollars has been modest as the U.S. economic expansion is still on track to reach a record-long run this year despite evidence of flagging since late 2018, analysts said.

“There is a reluctance to buy dollars, while the bar for selling dollars has been relatively high because people have been burned before,” said Steven Englander, global head of G10 FX research at Standard Chartered Bank in New York.

An index that tracks the greenback against a basket of major currencies was 0.16 percent higher at 96.722. It touched 96.745 earlier on Tuesday, near a 1-1/2-week peak.

Ten-year Treasury note yields were 2.414 percent in late U.S. trading, holding above a 15-month low of 2.3770 percent set on Monday. The premium on three-month T-bill rates was a little more than 4 basis points, about half a basis point more than Monday, Refinitiv data showed.

Faiq Mahmudov

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