Dollar Rebounds Along with Yields Ahead of Powell


The dollar index, which measures the US dollar against a basket of major currencies, recovered slightly to 90.48, as US yields rebounded. The positive correlation between the dollar and treasury yields was significant in the past couple of days. As US 10-year treasury yields breached the 1% level, the dollar bounced-off its lowest levels in almost three years. Currently, market participants are looking forward to the comments of the Federal Reserve Chairman Jerome Powell over the rally in yields. The EURUSD declined to $1.2135, and the USDJPY rallied to 104.19.


Futures tied to major US stock indices were mixed as the rush towards cyclical stocks over technology stocks continued. Investors are focusing on Biden's spending plan and the vaccination progress, which should work in line to support the economic recovery and boost cyclical stocks. On the other hand, Powell's comments will be highlight what to expect in the coming months from the Federal Reserve. The Dow Jones Industrial Average futures rose to 31089, the S&P500 futures inched higher to 3816, while Nasdaq futures held steady near 12950.


Precious metals prices slipped as the dollar regained track along with US yields. The price of a gold ounce dipped to $1829, the price of a silver ounce fell to $25.04, and palladium futures hovered near $2400.


Oil prices eased from their highest levels since February 2018 despite the drop in inventories. Investors are afraid of the lockdowns in Asia, where the oil demand has recovered the most. On the other hand, the US Energy Information Administration reported a decline in US oil inventories by 3.247 million barrels. Oil benchmarks will remain subject to any headlines about the COVID19 spread in Asia. The West Texas Intermediate crude February contract traded near $53, and Brent Blend March contract slipped to $56.

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