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US dollar surges as US short-term yields hit 22-month highs
As traders trickle back to their desks to start another year, there’s one market move dwarfing all others: The US dollar is trouncing its major rivals. The chart below highlights the move, with the so-called commodity dollars (the Canadian, New Zealand, and Australian dollar) bearing the brunt of the selling. So what’s driving the big move in the greenback? As always, one of the strongest cross-market correlations is between short-term interest rates and currencies. As the chart below shows, the 2-year US Treasury yield is trading up 5bps already today to its highest level since the start of the pandemic 22 ... (full story)