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Dollar Forex Market Bounces Back Amid Changing Mood

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  • Rising Bond Yields Help USD Fightback
  • Euro Pound Ease Off With Jobs Data Due
  • Busy Earnings Period Continues on Wall Street

The USD forex market has lifted slightly as risk aversion starts to creep back among traders. This changing sentiment has been matched in good time by a recovery in the US 10-Year Treasury yield as it moves back to a more stable level. Both occurrences have prompted Dollar buying that has had the opposite impact on both the Euro and Pound. Meanwhile, on Wall Street, the busy earnings season continues as the Dow Jones looks to build on the record number of yesterday.

Treasury Yields Support Dollar Return to Form

The Dollar has been driven lower in the last week with a more positive market mood tempting traders away from the traditional safe haven. This was accompanied by a falling 10-year Treasury yield in particular. This same yield number is now back on the rise, and at the same time, helping to support a day of increased demand for the USD. The market mood has soured slightly and those forex trading the Greenback look to be starting a retreat. 

This move seems to be underpinned by a number of factors. These include the return of the yield to a position of greater strength and renewed concern in China over the Evergrande situation. The stock dropped double digits as it reopened today after being suspended for the last two weeks. This has led many to worry about a ripple impact should the company fail to find a solution. 

Fall Back From Euro and Pound

At the same time as the Dollar was on the increase again, the Pound has been falling back and now trades close to 1.38. Many in the UK expect the Bank of England to go for a rate hike soon though the likelihood of this seems to have dropped slightly with lower inflation numbers coming in the UK. Then there are continuing COVID and Brexit concerns to tackle.

The Euro is consolidating having sold off slightly earlier in the session. It stays around 1.165 for the moment with key data awaited from the US. This includes weekly initial job claims, and existing home sales figures which can both move the market with forex brokers

Wall Street Looks to Build on Positive Week

The Dow Jones traded at a new all-time high yesterday, adding more than 150 points amid what has broadly been a positive earnings season so far. The early pre-market trading was quiet today with futures dipping slightly though the general feel on Wall Street remains one of optimism. 

The FDA in the US also continued to take steps aimed at getting more and more of the population fully vaccinated. They have authorized booster shots of J&J as well as Moderna vaccines and also approved the mixing and matching of booster shots that differ from the original vaccine brand as the country continues to get back to full speed.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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