Title: Dollar Up, After a Strong Rebound in the U.S. 10-year Treasury Yields

Jul 05, 2022 12:37AM ET

By: AnalysisWatch

The dollar strengthened in Asia Tuesday morning, receiving support from a sharp rise in U.S. 10-year Treasury bond yields.

The US dollar index, which tracks the greenback against a basket of other currencies, stabilized at 105.14 by 12:32 AM ET.

The USD/JPY pair rose 0.42% to 136.26.

The pair AUD/USD decreased 0.11% to 0.6856, and the pair NZD/USD eased 0.06% to 0.6201.

The pair USD/CNY decreased by 0.10% to 6.6933, while the pair GBP/USD increased by 0.01% to 1.2106.

After the resumption of trading after a holiday, yields on 10-year U.S. Treasury bonds rose above 2.959%, having reached 2.7910% on Friday, the lowest level since May.

The political outlook may not support the euro in the long run, Tapas Strickland, market economist at National Australia Bank, said in a note.

U.S. President Joe Biden could announce this week the rollback of some U.S. tariffs on $300 billion worth of Chinese imports to counter inflation. The Biden administration could also launch an investigation into industrial subsidies, which could lead to further tariffs in strategic areas such as technology.

In Asia-Pacific, China's services sector posted its fastest growth rate in nearly a year in June as COVID restrictions eased and demand rebounded. China's Caixin Purchasing Managers' Index (PMI) for the services sector rose to 54.5 in June, the fastest growth since July last year and the first expansion since February.

Investors are now also watching Australia's interest rate decision, due later today. The central bank is expected to raise interest rates twice by half a percentage point.