CURRENCIES: Dollar Rebounds, Helped By 10-year Treasury Yield Topping 2.70%

By Victor Reklaitis, MarketWatch Features Dow Jones Newswires

Buck catches a bid after last week's slump

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The dollar advanced Monday, recovering somewhat from last week's drop as it got a lift from a jump in the yield on the benchmark 10-year Treasury note.

The ICE U.S. Dollar Index was up moderately on Monday to 89.272, following last week's slide of about 1.6% that put it around 89.085 (http://www.marketwatch.com/story/trump-boost-fades-for-dollar-as-investors-brace-for-gdp-data-2018-01-26).

The buck has been "aided by continuing rise in U.S. yields, which broke the 2.70% barrier on the benchmark 10-year for the first time since 2014," said Boris Schlossberg, managing director of foreign-exchange strategy for BK Asset Management, in emailed comments Monday.

"It was the first time in weeks that the correlation between fixed income and FX was working, suggesting that the greenback may be finding some sort of near-term bottom," he said.

The rate on 10-year Treasury notes was recently up by 4.2 basis points to 2.7042% (http://www.marketwatch.com/story/us-10-year-yield-jumps-above-27-to-highest-level-since-2014-2018-01-29), its highest level since April 2014, according to FactSet data. Rising yields in the U.S. tend to make the dollar more attractive.

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Last week, the ICE gauge for the dollar fell to levels last seen three years ago as Treasury Secretary Steven Mnuchin spoke favorably about a weaker buck (http://www.marketwatch.com/story/dont-be-so-surprised-by-mnuchins-endorsement-of-a-weak-dollar-2018-01-24), but then played down his remarks (http://www.marketwatch.com/story/trump-boost-fades-for-dollar-as-investors-brace-for-gdp-data-2018-01-26), with President Trump also saying Mnuchin's comments were taken out of context (http://www.marketwatch.com/story/dollar-falls-further-as-mnuchin-defends-weak-buck-comments-2018-01-25).

Chart watchers this week are seeing a chance for a dollar rebound (http://www.marketwatch.com/story/chart-watchers-see-a-chance-to-play-a-dollar-rebound-2018-01-29), saying the selling looks overdone.

The euro was changing hands at $1.2382, down from $1.2427 late Friday in New York, while the buck bought 108.80 Japanese yen , up from 108.59 yen Friday.

The pound fetched $1.4065, down from $1.4160 Friday.

(END) Dow Jones Newswires

January 29, 2018 07:42 ET (12:42 GMT)