Dollar struggles to support rally, look at bond yields By Reuters


© Reuters. FILE PHOTO: Four thousand US dollars are counted by banker at Westminster bank

By Wayne Cole

SYDNEY (Reuters) – The US dollar struggled to maintain a rare rally together on Monday as its longest streak of losses in a decade left much of the market structurally below the currency and vulnerable to pressure on bullish news .

The Bears were surprised by a better payroll report on Friday, which pushed Treasury yields higher in the massive $ 112 billion debt sell-off this week. Still, the dollar ended up lower for the seventh week in a row.

“Our portfolio has been positioned for several weeks now for a slightly weaker dollar due to the independent surge in COVID-19 infections in the United States which has opened a decent gap in short-term economic performance, particularly against the Europe, ”analysts at JPMorgan (NYSE 🙂 in a note.

“Our positions were concentrated in the EUR block, also reflecting the structural improvement of the European political framework following the agreement on the stimulus fund. ”

The euro edged up to $ 1.1791 on Monday, after hitting a two-year high of $ 1.1915 last week, which now acts as major resistance. Support costs around $ 1.1755 and $ 1.1694.

Turnover was light with Tokyo on vacation and considerable uncertainty over whether US policymakers can agree on a new budget support package for the virus-hit economy.

House of Commons Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin said on Sunday they were ready to resume talks on COVID-19 aid, after President Donald Trump took executive action on them. unemployment benefits.

Against a basket of currencies, the dollar was a little firmer at 93.339 and just above a two-year low.

The dollar was a little more stable against the yen at 105.75, well above the recent low of 104.17 but facing strong resistance at 106.46.

Investors feared a further surge in Sino-U.S. Tensions with trade talks slated for Aug. 15 even as Washington imposed sanctions on senior officials in Hong Kong and China.

Any break in negotiations would tend to benefit the dollar and the Swiss franc, a safe haven, to the detriment of the Japanese yen and commodity currencies like the Australian dollar.

On the data front, the United States has consumer prices on Wednesday and retail sales on Friday, which are expected to post a strong rebound in spending, although before the latest round of social restrictions put some pressure on the economy.

A series of Chinese figures are expected this week, which should show a continued recovery, while EU production data should also please.

Data showed that Chinese factory deflation eased in July, driven by rising global oil prices and increasing industrial activity to pre-coronavirus levels.

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