The dollar, on Monday, January 9, strengthened in Asia after signs of wage pressure in the December U.S. jobs report proved enough to lift Treasury yields.
The greenback advanced on a broadly softer yen, adding 0.5 percent to 117.43 and nearing near-term resistance at 117.77. Support was seen around 116.80/90.
It had already recovered all the way from a 115.06 trough on Friday, but remains well short of the next major chart target around 118.60.
The euro was steady at $1.0530, after ricocheting between $1.0339 and $1.0621 last week, but also gained ground on the yen to 123.65.
There were enough hints of inflationary pressure in Friday’s mixed U.S. payrolls report to support the case for more interest rate hikes and reverse a down move in yields and the dollar.
Yields on U.S. 10-year notes rose from 2.33 percent to 2.42 percent on the data. Yet that remained some way from the December peak of 2.64 percent, and the spread over German yields was also off its highs.
The outlook for U.S. rates may become a little clearer when Federal Reserve Chair Janet Yellen appears at a webcast town hall meeting with educators on Thursday.
Dealers in Asia will also be keeping a wary eye on the yuan after Beijing engineered a sharp tightening in liquidity last week that squeezed speculators out of short yuan/long U.S. dollar positions, Reuters reports.
Figures out over the weekend showed China’s foreign exchange reserves fell to nearly six-year lows in December as Beijing fought to stem an outflow of capital that could ultimately force another devaluation of the currency.
