Dollar little changed as Treasury yields dip, economic data disappoints
• Jobless claims, home sales data disappoints
• Cryptocurrencies jump
NEW YORK: The dollar pared earlier gains on Thursday as this week’s upward trajectory of in U.S. Treasury yields took a breather. The greenback edged lower after weekly applications for unemployment insurance unexpectedly jumped to a three-month high.
A separate report showed that sales of pre-owned U.S. homes dropped by 4.6% in December, more than analysts anticipated.
“The dollar’s been soft this year,” said Marc Chandler, chief market strategist at Bannockburn Forex in New York. “The U.S. economy is facing big headwinds, which is why I’m not nearly as progressive as other people are on the Fed.”
“There’s so much tightening coming, and the economy seems to me a bit more vulnerable than many people expected,” Chandler added. “This means the dollar is going to have a tougher second half of the year than first half.”
U.S. benchmark 10-year note yields were at 1.8308%, off their two-year high of 1.902% reached on Wednesday.
The advance was driven by market expectations that the U.S. Federal reserve will tighten monetary policy at a faster pace than previously anticipated. Fed funds futures have fully priced in a rate hike in March and a total of four in 2022.
“The big focus is next week’s FOMC meeting and the market will probably be cautious ahead of the weekend, and that’s because of the geopolitical uncertainty at the Ukrainian border,” Chandler said, referring to the Federal Open Market Committee.
The Euro was last at $1.1311, below an earlier high of $1.1369.
The pound was 0.15% higher at $1.3636 and the yen was nominally lower 114.11 per dollar.
The Aussie firmed 0.64% to $0.7257, extending advances from the previous day, and the Canadian dollar pared earlier gains, with one U.S. dollar worth C$1.2483.
The Norwegian crown fell after the central bank voted to keep interest rates on hold at 0.5% and said it was on track for an interest rate hike in March.
The crown was last down nearly 0.2% against both the euro and the dollar.
Among cryptocurrencies, bitcoin was most recently up 3.6% at $43,182, while smaller rival ether gained 5.5% at $3,249.