The dollar edged higher across the board on Monday, extending a rebound from the near threeyear low hit last week, taking strength from the recent spike in Treasury yields and the prospect of a growth boost from higher U.S. fiscal stimulus.
Democratic U.S. Presidentelect Joe Biden, who takes office on Jan. 20 with Democrats able to control both houses of Congress, has promised trillions in extra pandemicrelief spending.
Ordinarily, the extra spending plans would prompt investors to worry about rising inflation and its detrimental effect on the U.S. dollar in a weak economy, but the currency has been supported in recent weeks thanks to rising U.S. yields.
U.S. government bond yields have logged big moves in recent sessions, with the Treasury yield curve experiencing a significant increase in yields in longerdated bonds.
Benchmark Treasury yields rose to 10month highs on Monday as investors priced for higher government spending under the incoming Joe Biden administration and before the Treasury will sell new longdated supply.
At 99 basis points, the spread between the 2year and 10year Treasury yield is at its steepest since July 2017..
The U.S. dollar index was 0.2 higher at 90.494, its fourth straight session of gains. The index fell as low as 89.21 last weak, its weakest since March 2018.
The appreciation of the dollar is coming at a time of not only rising yields but a riskoff period created by heightened uncertainty about political developments in the U.S., said…