Major currencies still aligned to risk sentiment than yield differentials – HSBC

Omkar Godbole FXStreet Contributor

Analysts at HSBC are skeptical about the sustainability of the US dollar's recent bounce, which has been supposedly fueled by the rise in Treasury yields. The 10-year yield rose to a 10-month high of 1.18% on Tuesday.

"The most recent relationship between the currency and risk appetite as measured by the S&P 500, is stronger than the relationship between the relevant two-year yield differentials," analysts said, adding that yields at the front-end (short duration bond yields) need to rise to have a material impact on exchange rates.

The dollar index, which tracks the greenback's value against majors, is now hovering below 90.00, having rallied from 89.21 to 90.73 in the four trading days to Jan. 11.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD pops to three-week highs above 1.3400

GBP/USD accelerates its advance and surpasses the key 1.3400 barrier on Wednesday. That said, Cable clinches new multi-week tops on the back of the resurgence of the selling interest in the Greenback despite persistent tensions in the Middle East.

EUR/USD reverses losses, targets 1.1450

EUR/USD trades with decent gains north of the 1.1400 hurdle in the latter part of Wednesday’s NA session. The fresh offered stance in the US Dollar allowed the pair to revert the initial drop and refocus on the upside despite the hawkish tone from the FOMC Minutes and persistent geopolitical tensions.

Gold trims losses, looks at $4,100

Gold manages to regain some composure and bounce off earlier lows on Wednesday. The precious metal now shifts its focus to the $4,100 mark per troy ounce amid decent losses in the US Dollar and steady geopolitical jitters.

Dogecoin Forecast: DOGE risks sliding below $0.07 despite returning retail interest

Dogecoin (DOGE) edges lower toward support at $0.07 at the time of writing on Wednesday. The meme coin reflects a broader sell-off in the crypto market, primarily attributed to uncertainty over tensions in the Middle East. Iran launched attacks on American military bases in the Middle East on Wednesday in retaliation for attacks by the United States (US) on several places in Iran.

2.50%: Why the Kiwi's first hike in three years is a wager on a number nobody can see

The Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 25 basis points to 2.50% at 02:00 GMT on Wednesday, its first hike in three years and the moment the bank that cut deeper than any G10 peer last cycle turned to face the other way.

Bye, forward guidance: How to trade when central banks choose silence

Central banks have spent years telling markets what might come next. Now, traders face the possibility that they say a lot less. From the Federal Reserve to the European Central Bank and the Bank of England, policymakers are pushing back against forward guidance.