By Peter Nurse
Investing.com – The dollar gains positions at the beginning of the trading day in Europe this Tuesday, rising especially against the yen as the yield of US Treasuries increases, while expectations that the Federal Reserve will raise rates of interest in early 2022 despite the rise in Covid-19 cases.
At 8:55 a.m. (CET), the, which follows the evolution of this currency with respect to a basket of six other major currencies, rises 0.1% to 96.310, close to the highs of a week registered this Tuesday in 96.338.
The pair rose 0.3% to 115.72, not far removed from its nearly five-year highs, driven by a rise in the yield on US Treasuries, pushing the yield on 10-year bonds to 1.64% for the first time since November 24.
Money markets take it for granted when it comes to setting prices that the United States will make the first rate hike in May, and two more by the end of 2022.
The pair is down 0.1% to 1.1285, close to a week-long lows, despite a rally in November. The pair fell to 1.3466, retreating towards the lows recorded overnight at 1.3431, a level not observed since November 29, while the, very risk-sensitive, rose 0.2% to the level of 0.7208, just above the almost two-week lows recorded overnight.
The number of coronavirus cases caused by the Omicron variant has continued to rise, with the United States registering a daily world record of more than one million cases. Although this is affecting global travel and some public services, investors remain optimistic that the economic impact will be limited, allowing the recovery to continue and the Federal Reserve raising interest rates several times in 2022.
“While stocks have risen driven by abatement of Omicron fears, that same situation has allowed Treasury bond yields to rise sharply, pushing up the dollar,” said Jeffrey Halley, analyst. by OANDA. “The rally in the dollar could be exhausted if confidence remains strong, but movements in stocks and currencies highlight the mess that could be seen this coming year, without the unifying theme of central bank support after the recovery fostered. for vaccines “.
Investors will focus on the December release, as well as the November release, released this Tuesday, as the latest indicators of the strength of the US economy.
On the other hand, the pair rose 0.4% to the 6.3748 level despite the fact that the activity of Chinese factories grew at its highest rate in six months in December, rising to 50.9 points, its level highest since June.
The pair is up 0.2% to 4.0581, and Poland’s central bank is expected to announce the first interest rate hike of this year on Tuesday as inflation in the country has soared.
Polish Governor Adam Glapinski said last week that inflation would exceed 8% in June, and the central bank is expected to raise benchmark rates this Tuesday by 50 basis points, to 2.25%, according to 15 December. the 17 economists surveyed by Bloomberg. The other two believe that there will be a rise of 75 basis points.