NEW YORK: The US dollar appreciated against a basket of major currencies on Monday, the first trading day of the new year, following government bond yields as investors expect the Federal Reserve to maintain its upward trajectory interest rates in 2022.
As the surge in coronavirus cases caused by the Omicron variant continued to impact travel and public services around the world, hopes were high that lockdowns would be avoided.
On Monday, the United States Food and Drug Administration cleared the use of a third dose of Pfizer and BioNTech COVID-19 vaccine for children ages 12 to 15, and reduced the duration of all booster shots at 5 months, compared to 6 months after primary. dose.
Yields on two-year US bonds, which are sensitive to expectations of rising rates, as well as 5-year bonds, reached their highest level since March 2020. US 10-year and 5-year benchmark yields rose reached six-week highs. The US central bank is expected to start raising interest rates by mid-2022.
Stocks on Wall Street were slightly higher, but had retreated from earlier gains.
“You’ve seen this rise in returns, fall in the S&P and it’s kind of like a double whammy – you get the returns game and a little combination of risk,” said Erik Bregar, President and CEO. of Bregar Capital Corp in Toronto.
“Right now, yields are the driving force. “
The dollar index rose 0.615%, while the euro fell 0.63% to US $ 1.1296.
Economic data showed a manufacturing gauge for December by Markit fell to 57.7 from its previous reading of 57.8, but still indicating expansion. November construction spending rose 0.4%, below expectations calling for a 0.6% increase.
The Japanese yen weakened 0.21 percent against the greenback to 115.30 per dollar, while the British pound last traded at US $ 1.3437, down 0. 68 percent on the day.
Trading volumes, however, are expected to be limited as London, Europe’s main currency trading center, is closed for a market holiday.
Across the eurozone, manufacturing activity remained resilient as factories took advantage of easing supply chain constraints and sourced raw materials at a record pace.
Turkey’s annual inflation rate reached 36.1% last month, its highest level in 19 years that Tayyip Erdogan ruled, revealing the extent of a currency crisis caused by policies to cut interest rates. unorthodox interest of the president.
The pound was trading at 13.02 against the dollar after the data, 1.2% lower on the day, but at a low of 13.92.
Bitcoin fell 0.98% to US $ 46,885.99.
(Reporting by Julien Ponthus and Sujata Rao in London; Editing by Alexander Smith)