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USD Forex Market Slightly Stronger Against Major Currencies

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  • Dollar Gains on Higher Treasury Yields
  • Data and Domestic Issues Hurt Pound
  • Busy Earnings Period Continues on Wall Street

The Dollar has gained some ground to start the week against other major currencies in the forex market. The US Dollar Index moved higher yesterday as Treasury yields continued to push upward. The Pound and Euro both lost a little ground against the strong Dollar with Sterling also battling leadership issues and controversy at home. This, coupled with disappointing employment data has restrained movement in the currency. Meanwhile, on a short trading week, major earnings will be watched on Wall Street.

Treasury Yields Boost Dollar Index Higher

US Treasury yields continue to move higher in what has been an about-turn for the economy when compared with earlier in the pandemic. The Fed policy changes and expectations of rate hikes and hawkish policy to come have helped push yields back up. This in turn has helped the US Dollar to retain strength even as omicron cases continue, and the question of inflation still lingers. 

With yields on the benchmark 10-year hitting a new two-year high at 1.85% earlier, the Dollar Index has also moved up alongside these figures. This strength has also been preserved thanks to concerns in China amid an increase in COVID cases and geopolitical issues with Russia and Ukraine. Those forex trading currently seem satisfied to remain with the safe-haven Dollar.

Pound Faltering Amid Domestic Political Issues

On the other side of a Dollar that is retaining strength and rebounding, the Pound has consistently failed to make the most of any greenback weakness. Forex brokers and analysts have often put this down to Brexit-related issues, though now it is an ongoing leadership row that has hampered the Pound. 

Pressure is on PM Boris Johnson to resign as controversy rolls on related to the so-called “Partygate” scandal. Leaks from the UK have disclosed details and images of several parties at the Prime Minister’s residence throughout periods when the country was under strict measures to limit the spread of COVID-19. This news has brought outrage from opposition leaders and the British public that undoubtedly limits the GBP upside at present. 

Earnings Continue to Come on Wall Street

As Wall Street opens for a shortened trading week after the Monday holiday, the focus will continue to be on the major earnings to come for this week. Many major names will report including Bank of America, and Netflix prior to the opening bell this morning. 

Those numbers could shape the pattern for the day ahead as the banks in particular look to follow the trend of Friday when Wells Fargo and other major names in the sector reported above expectations. The early trading though shows little change from a mixed Friday session. It has so far been a 2022 to forget for stock traders with challenges to come from all sides that have seen a disappointing January. This is particularly evident in the NASDAQ and major tech names.

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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