USD Graphic Rewind: Dollar Index Climbs As Rising Yields Bolster Greenback
The dollar index climbed smartly on Monday as the buck continued its journey higher, touching the highest level since October 1. The dollar was boosted early in the day by stronger than expected retail sales in the US, the recent string of better-than-expected data out of the US is calling into question if QE2 is warranted and how much will really be implemented. The index continued to gain late Monday as Treasury prices deepened their decline, pushing 10-year yields towards the highest level in three months follow a report that a Moody’s analyst said extending Bush tax cuts would be bad for the US credit rating. As Treasury prices tumbled US stocks erased the bulk of their gains with the positive sentiment that prevailed after the jump in retail sales getting knocked.
The index has come under some pressure in the over-night session as US Treasury prices climbed (and yields fall) after attracting some bargain hunting interest out of Asia with market players call the massive sell-off over the last two days as over-done. Adding to the pressure are Fed Yellen’s comments in a WSJ interview defending QE2 and with a generally bearish outlook for the US economy she stays in line with her generally dovish stance.
