Dollar lifted as Treasury yields stabilise from drop

Dollar lifted as Treasury yields stabilise from drop

A rise in U.S. Treasury yields, driven by expectations of higher government spending under the Joe Biden administration, has helped boost the battered dollar in recent sessions.

On Tuesday, the relentless decline in gold prices paused after Democrats began the process of impeaching President Donald Trump for a second time on Monday.

The Dow Jones Industrial Average fell 62.98 points, or 0.2%, to 31,034.99, the S&P 500 lost 21.92 points, or 0.57%, to 3,802.76 and the Nasdaq Composite dropped 146.83 points, or 1.11%, to 13,055.15.

With Asian stock markets also lower, MSCI's gauge of stocks across the globe shed 0.65% after closing at a record high on Friday.

Gold jumped on Wednesday after the United States dollar and Treasury yield declined and hope for a large U.S. fiscal stimulus boosted its appeal.

Yields on the benchmark Treasury note dropped to 1.110% in early trade, down from an nearly 10-month high of 1.187% on Tuesday.

The climb in yields in turn offered some support to the dollar, which rose to its highest in over two weeks against a basket of currencies.

The view that inflation will return "seems to ignore what is happening in the commercial real estate market (and the price bubble set to burst in the residential housing market)", wrote David Rosenberg, chief economist and strategist at the Toronto-based Rosenberg Research.

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The pullback in yields pushed the dollar below 104 Japanese yen to trade at 103.95 yen, up 0.2%.

The euro steadied at $1.2208 and dollar index was steady at 89.991 on Wednesday after falling 0.5 per cent on Tuesday.

Morgan Stanley said it had moved to neutral from bullish on emerging market currencies as its forecasts had been hit and factors that kept the USA dollar on the back foot may not be sustained.

Spot gold was little-changed at $1,843.85 an ounce at 9:20 Singapore.

Commercial property prices fell almost 10% in 2020, according to the Green Street Commercial Property Price Index, although the hardest hit sectors saw declines of 15% to 25%.

IG Market analyst Kyle Rodda said, "the big picture is it's still a very constructive year for gold".

Bitcoin last fell 17.49% to $31,498.43.

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