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[QUOTE="TraderSmith, post: 193549, member: 42912"] [B]Forex Market News-Dollar gains as U.S. recovery bets stoke Treasury yields[/B] The dollar gained against major currencies on Tuesday and climbed to a one-year high against the yen, as accelerating U.S. vaccinations and plans for a serious stimulus package stoked inflation expectations and raised Treasury yields. The safe-haven dollar found support across the board as investors also digested the fallout from the collapse of highly leveraged investment fund Arch egos Capital. The dollar index rose above the 93 mark and was last up around a 3rd of a percent at 93.185, its highest level in four months. The dollar also rose above 110 yen, A level not seen since March last year, and was last up 0.5% on the day. It is on target for the simplest month since late 2016, with the top of Japan's financial year this month driving up dollar demand as companies square their books. Analysts said the yen was also susceptible to higher inflation expectations within the United States than in Japan and an increase in long-term U.S. yields. Ten-year U.S. Treasury yields rose to 14-month highs on Tuesday, the day before President Joe Biden is about to stipulate how he intends to pay money for a $3 trillion to $4 trillion infrastructure plan. "USD/JPY has far and away the very best correlation amongst G10 currencies with long-term US yields," said Lee Hardman, currency economist at MUFG during a note. "Upward pressure on long-term US yields is predicted to be supported by another fiscal stimulus policy announcement from the Biden administration." The euro weakened on the day to $1.17290, its lowest level since November. Tougher coronavirus curbs in France and Germany have dimmed the short-term outlook for the European economy. A widening spread between U.S. and German bond yields is adding pressure on the euro. The monthly U.S. non-farm payrolls report are going to be closely watched at the top of in the week , with Federal Reserve System policymakers thus far citing slack within the labour marketplace for their continued lower-for-longer stance on interest rates. "In every week when the market is feeling so optimistic about the forthcoming payrolls release, it seems very likely that the greenback will find strong support," Rabobank currency strategist Jane Foley wrote during a report. However, "the market is at risk of pricing in an excessive amount of inflation risk," meaning "we see scope for the USD to melt within the months ahead," the report said. [/QUOTE]
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