Dollar gives up 3-week high on profit-taking

Dollar gives up 3-week high on profit-taking

In Washington, the House is set to issue a largely futile ultimatum to Vice President Mike Pence on Tuesday, demanding he invoke constitutional authority to remove President Donald Trump from office, as a prelude to an expected vote to impeach the president for the second time in little more than a year.

The dollar index fell 0.463%, with the euro up 0.45% to $1.2204.

In Asia, the largest MSCI index of Asia-Pacific stocks excluding Japan fell 0.2%, after jumping 5% last week to record highs.

The spread between the rate on the two- and 10-year notes had risen every single day this year as investors bet on additional USA fiscal stimulus, more bond issuance and higher yields on longer-maturity Treasuries. Japan's Nikkei was closed for a holiday after closing at a 30-year high on Friday.

"The glory days of gold are over", said Stephen Innes, chief global market strategist at Axi.

"Asia's growth is stronger, with for the most part better demographics and debt levels, than advanced economies".

"For the first time the global semiconductor sector's market capitalisation has surpassed energy", he said. The dollar had hit a more than 2-1/2-year low in January after sliding for months as ultra-dovish policy from the Federal Reserve encouraged investors to seek alternative currencies.

Gold gained 0.6% to 41,855.25 an ounce.

"In the medium-term, we remain bearish on the dollar".

With the Fed reluctant to buy longer-dated bonds, yields on 10-year Treasuries jumped almost 20 basis points last week to 1.12%, the biggest weekly increase since June.

China says World Health Organization team to probe COVID-19 origins will arrive Thursday
The pandemic first emerged in the central Chinese city of Wuhan in late 2019. China has recorded 87,536 total cases of the virus, including 4,634 deaths.

Treasury futures lost another 3 ticks early Monday.

Mark Cabana, of BofA, has warned that the stimulus could put pressure on the dollar and cause the Fed to fall later this year.

"An early Fed taper creates upside risks to our year-end 1.5 per cent 10-year Treasury target and supports our longer-term expectations for neutral rates moving towards 3 per cent", he said in a note to clients.

The poor payroll report will increase interest in U.S. data on inflation, retail sales and consumer sentiment.

Big bank earnings on Friday, as well, including fourth-quarter updates from JPMorgan Chase, Citigroup and Wells Fargo will be in sharp focus this week, as will key retail sales data for the month of December.

The climb in yields in turn offered some support to the down-trodden dollar, which had edged up to 90.439 against a basket of currencies from last week's low of 89.206.

He noted that the recent plunge came as investors pulled money from gold to invest US Treasury yields, which are at new highs of March.

Platinum fell 1.5% to $1 048.65 per ounce, while palladium dipped 0.6% to $2 356.82. Prices fell as much as 4.4 per cent on Friday.

WTI contracts for February jumped 69 cents to $52.94 per barrel, while Brent futures for March added 77 cents to $56.43 per barrel.

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