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The US dollar seesawed between gains and losses, attempting to find a clear direction and led by US Treasury yields once again. As the 10-year U.S. Treasury yield spiked to start 2022, investors have been rotating into more cyclical and value names. On Monday, the 10-year climbed as high as 1.8%, after ending 2021 at 1.5%.
US Treasury yields were up amid inflation-related concerns. The yield on the 10-year note touched 1.80% but currently stands at 1.77%.
The EUR/USD pair trades around 1.1330, while GBP/USD hovers in the 1.3570 level, posting modest intraday losses. AUD/USD is unchanged on a daily basis, although USD/CAD advanced, with the Canadian Dollar weakening alongside oil. Oil prices spent the trading session under pressure, with WTI settling at $78.10 a barrel.
Gold, on the other hand, managed to recover some ground and trades just above the 1,800 threshold heading into the Asian opening. Nevertheless, its bullish potential remains limited.
Economic Data
The Commerce Department said on Monday that wholesale inventories rose 1.4%, instead of 1.2% as estimated last month. Stocks at wholesalers increased 2.5% in October.
Wholesale inventories in the United States rose 1.4 percent from a month earlier to $771.09 billion in November of 2021, above a preliminary estimate of 1.2 percent. Increases were seen in inventories of durables (2.1 percent), namely machinery (1.2 percent), automotive (2.7 percent) and professional equipment (0.9 percent).
Other Developments
West Texas Intermediate, the benchmark for US crude, settled down by 67 cents, or 0.9%, at $78.24 per barrel. Brent, the global benchmark for oil, gave up 88 cents, or 1.1%, to settle at $80.92 at the time of writing. During early trading, both contracts rose by about 50 cents.
While several countries are adapting to live with Covid, China clearly continues to pursue its zero-covid policy. This is a risk to oil demand since China is the largest crude oil importer in the world.
Australia will publish November Retail Sales and the Trade Balance for the same month, likely to spur some action in the Asian session.
The Japanese yen appreciated vs the dollar, with the pair currently trading at around 115.20. The sour tone of global indexes weighed on the pair as European and American indexes closed in the red.
US Treasury yields were up amid inflation-related concerns. The yield on the 10-year note touched 1.80% but currently stands at 1.77%.
The price of bitcoin fell at one point Monday to its lowest low since September 2021, as rising rates continue leading investors to shed positions in risky, growth-oriented assets.
Bitcoin fell as much as 6% to touch a low of $39,771.91, according to Coin Metrics, but has since reclaimed some of its losses. It last traded about 4% lower at $40,758.90. Ether, the second-largest cryptocurrency by market cap, fell more than 6% to $2,979.82.
Declines across the cryptocurrency market follow rough trading for equities, particularly momentum stocks.
US Inflation Starring Economic Outlook This Week
Market players, traders and investors await news about US inflation, as the country will release the final reading of the December Consumer Price Index next Wednesday, and it is expected to have been upwardly revised to 7% YoY.
The US Fed’s Chair Jerome Powell is due to testify on Tuesday on the re-nomination to chair the Federal Reserve Board of Governors before Senate Banking Committee. Powell’s remarks will likely be released before the event and will be closely watched for any hint on the future of monetary policy.
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