
Please try another search
By Geoffrey Smith
Investing.com -- The dollar was marginally lower in early trade in Europe Wednesday, consolidating after being pulled higher by rising bond yields and a broad drop in risk appetite as the U.S. returned from a long holiday weekend on Tuesday.
By 3:05 AM ET (0805 GMT), the dollar index, which tracks the greenback against a basket of developed market currencies, was down less than 0.1% at 95.677, after hitting its highest level in a week on Tuesday at 95.805.
The main driver for that upward move had been fears of inflation and expectations of aggressive action by the Federal Reserve to contain it. While talk of a 50-basis point hike in official interest rates at the Fed's March meeting is still confined to a small minority, short-term money market futures have implicitly started to price in that risk.
The yield on the 10-Year benchmark U.S. Treasury continued to grind higher in early dealings, however, rising two basis points to a new two-year high just under 1.90%.
The sell-off in bonds has not been limited to the U.S. Germany's 10-Year benchmark bond traded above 0% for the first time since 2019, after German inflation was confirmed at 5.3% - the highest since the reunification boom over 30 years ago - in December. At a Eurogroup meeting on Tuesday, Germany's new finance minister Christian Lindner had warned of the need to rein in fiscal stimulus in the Eurozone and reintroduce some more effective limits on government borrowing, in a year when the European Central Bank is set to start winding down its support for Eurozone bond markets.
The euro was flat at $1.1332, after falling over 0.5% on Tuesday.
The pound was also struggling to make headway against the dollar, drifting just under $1.3600, despite another 30-year high in U.K. inflation that raised the prospects of the Bank of England raising interest rates again in the near future - possibly as early as its next meeting on February 3.
Figures from the Office for National Statistics showed both core and headline consumer prices rising 0.5% in December, well above forecasts. That pushed the annual CPI up to 4.2% and the annual core CPI up to 5.3%.
Other factors supporting the dollar have been the sharp rise in oil prices in recent days, which raises the dollar needs of non-U.S. who have to buy fixed amounts of oil. That factor may ebb a little Wednesday after Turkish officials said that a key export pipeline which had been taken offline after a mystery blast on Tuesday is now pumping at its usual rate again.
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 Investing.com'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.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other 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, don’t trash it.
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. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.