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Title: US Dollar Index retreats from weekly top on softer yields

Dec 08, 2021 20:16 AM ET

By: AnalysisWatch

The US Dollar Index (DXY) fell back from the week's high and was pushed around an intraday low of 96.25 during Wednesday's Asian session. The greenback index is following US Treasury bond yields south as market sentiment is once again in question and key catalysts are missing domestically.

Lately, geopolitical headlines about the rift between Washington and the Kremlin and the dispute between the US and China have worried market optimists. Doubts about China's real estate giants could add to market participants' fears.

Russia's refusal to make peace with Ukraine is irritating the US, with President Joe Biden threatening his Russian counterpart Vladimir Putin with sanctions and offering military support to Ukraine if the Kremlin invades Kiev. A senior US State Department official told Reuters news agency that Russia's refusal to make peace with Ukraine irritated the US. He said the Biden administration was holding "intensive consultations" with the new German government on its response in the event of a Russian invasion of Ukraine and believed that Germany would be prepared to take significant action in the event of a Russian attack.

The US boycott of the 2022 Beijing Olympics also does not bode well for China, with the Dragon Nation hinting at consequences for America as a result, according to Chinese media. Moreover, market optimism is fading due to doubts about the ability of China's troubled real estate companies to pay off looming debts after barely being able to pay interest.

It is worth noting that the mixed second-tier data from the US is also weighing on the DXY ahead of the key US Consumer Price Index (CPI) for November, due for release on Friday. Ahead of this, the risk catalyst is important in determining the short-term performance of the US dollar index.

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