Dollar and Treasuries Fall as Senate Looks Poised to Turn Blue

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Dollar and Treasuries Fall as Senate Looks Poised to Turn Blue

The U.S. dollar is declining right along with U.S. Treasuries as last night’s Georgia run-off election looks poised to give the Democrats control of the U.S. Senate.

Overview

Major outlets have already called one of the two races for the Democrat and a handful of other decisions desks have declared that both seats will be “blue”.  If this result holds, it will give incoming President Biden more control of his agenda which is likely to include more spending.  On the expectation of further fiscal stimulus, 10-year treasury yields advanced past 1% for the first time in ten months.   The U.S. dollar index is down 0.3%.

This morning’s economic data showed a bad miss for private payrolls. ADP reported that U.S. firms cut 123K jobs in December perhaps foreshadowing a poor Non-farm payroll print on Friday.  Later this morning, services and composite PMI’s will be released, followed by November factory orders are durable goods.  At 2 p.m. this afternoon, the minutes of the last Federal Reserve meeting will be released.  Around the same time, Congress will meet to certify the results of the November elections.


What to Watch Today…

  • Fed meeting minutes at 2 p.m.

View Economic Calendar

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EUR  

The Euro extended its recent gains versus the dollar and touched fresh highs last seen in 2018.  The common currency continues to benefit from a weakening dollar despite ever-increasing threats from the coronavirus.  Numerous countries have either added or extended their curbs to try to slow the spread of the virus, putting downward pressure on the economy.  Perhaps traders are looking past the immediate risks and are taking a longer-term view as vaccinations get underway and U.S. treasury yields pop higher.

AUD  

Commodity-based currencies have been the biggest gainers versus the U.S. dollar today.  Most commodity prices, save Gold, are in the green.  The Norwegian krone, Australian dollar, and New Zealand dollars all rose 0.7% as the price of raw materials rose along with risk sentiment.

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