Monday, 15 Nov 2010

Forex: USD Higher on Rising Treasury Yields

The dollar index hit a six-week high on Monday, boosted by a rise in U.S. Treasury yields that helps keep yield spreads wide versus government debt yields in other countries, maintaining the appeal of U.S. assets.

The 10-year Treasury yield hit a two-month high as the Wall Street Journal reported that a group of Republican-leaning economists is launching a campaign calling for the Federal Reserve to drop its plan to buy $600 billion of Treasuries.

Investors also sold the euro as Ireland struggled to convince investors it was in control of its debt problems, leaving open the possibility of a bailout. Fiscal problems in the euro zone periphery have shaken confidence in the region.

Analysts said rising Treasury yields would continue to boost the dollar as it picks up from a September-October sell-off in the lead-up to the Federal Reserve's announcement this month of $600 billion in quantitative easing.