Treasury Yields Help Lift Dollar Forex Market
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The U.S. dollar foreign exchange market showed slight weakness on Wednesday but rebounded strongly in early Thursday trading. A more positive market sentiment had seen the dollar weaken during the previous session, but the market reversed that as it awaited U.S. employment numbers to be released later. These numbers will act as a key driver on another quiet data day. Meanwhile, on Wall Street stocks remain bullish as the new year begins. This follows the Dow Jones and S&P 500 breaking new records.
Dollar, rebounds in early hours
On Wednesday, euro and pound traders had a good day. Both currencies showed a slight rise against the dollar. The euro rose above 1.135, and the pound above 1.35. This was a more than one‑month high for the two currencies that had been under heavy pressure from the dollar recently. However, this positive sentiment did not last long. Both currencies fell back to previous levels while the U.S. dollar index stayed above 96.00.
A major help to this recovery was the U.S. government bond yields. These yields helped the dollar regain some of the ground it had lost in early Thursday trading. With trading volume thinning ahead of the new year holidays, the greenback is in a very strong position.
Focus on unemployment claims ahead of the holiday
Traders and forex brokers have no data that actually shows market movement. This gives even more importance to the unemployment claims data to be released later by the Labor Department. These numbers have been steadily improving as more people have been finding jobs recently, but the impact of the Omicron variant is a concern.
In this regard, the United States is reporting the highest case numbers of the pandemic era while Omicron and Delta COVID‑19 variants continue to circulate nationwide. A 7‑day average of 265,000 cases was reported on Tuesday, exceeding the previous peak. This is despite more than 60% of Americans being classified as fully vaccinated.
Wall Street looks forward to another good day
Despite the decline in travel stocks due to ongoing COVID‑19 concerns, Wall Street stocks posted an overall solid close yesterday. The S&P 500 and Dow Jones hit new record highs, and are expected to maintain the favorable tone seen over the past few days.
The outlook has changed little, and as Omicron cases continue to rise, some turbulence may persist in travel stocks. However, 2021 has been a broadly positive year for the market. The S&P and NASDAQ rose more than 20%, and the Dow Jones posted gains of over 19%.
