US 10-year Treasury yields stay elevated following a jump to fresh long-term peaks above 1.60% seen last Friday
Following mixed-to-lower trading in Asia, European stocks opened marginally higher to start the week, with investors keeping a cautious tone ahead of central banks meetings due this week. In currencies, dollar demand dominates the markets as US 10-year Treasury yields stay elevated following a jump to fresh long-term peaks above 1.60% seen last Friday, as traders continue to price in increased economic activity in the US.
On Wednesday, the Federal Reserve meeting will be watched closely for hints the central bank officials are concerned about yields and inflation. The Fed is also expected to release fresh forecasts on economic growth. As for the accompanying statement, the central bank is expected to remain in “wait and see” mode for this meeting.
On Thursday, investor attention will shift to the Bank of England. The central bank is expected to leave stimulus unchanged. At the same time, monetary authorities could send a signal on rising rate expectations and express cautious optimism about economic recovery after finance minister Rishi Sunak’s announcement of $90 billion in extra stimulus early this month. Of note, in his remarks earlier today, BOE governor, Andrew Bailey, said they will need to see evidence that the trend in inflation is sustainable, while the rise in rates in the market is consistent with the change in the economic outlook.
GBPUSD has settled marginally below the 20-DMA on Monday, with the sterling staying steady these days despite the persisting demand for the safe-haven dollar amid high bond yields. However, the pair struggles to overcome the 1.4000 barrier while the mentioned moving average continues to act as the immediate resistance for bulls.
Meanwhile, EURUSD keeps sliding since Friday while staying above the 1.1900 figure that has been acting as the nearest support. It looks like the pair could stage a bounce in this area if risk sentiment stays relatively upbeat in the short term.