US Dollar Eases as Treasury Yields Retreat

USD

The dollar index which measures the greenback against a basket of major currencies eased a little off the top, falling to 90.86, as US Treasury yields surrendered partial gains. The significant rally in US yields triggered an upside move in the dollar against peers. The strong pullback in retail sales in January along with a rise in producers' price index lifted inflation expectations too. However, the correction in yields paused the dollar rally as the FOMC meeting minutes reiterated the Fed's current policy. The EURUSD inched higher to $1.2051 after trading as low as $1.2022, and the GBPUSD recovered to $1.3874 from $1.3829. Market participants are looking forward to the US initial jobless claims to have an insight into the labor market situation.

Equities

Major US stock index futures were softer especially those with big exposure to the technology sector as Treasury yields rally imposed some fears. The reflation trade is supporting the flow to cyclical stocks, while weighing on technology stocks which are believed to have risen significantly away from their potential growth. However, the FOMC minutes confirmed the Fed's current monetary policy stance, easing the impact and cutting the losses. The Dow Jones Industrial Average futures held steady near 31500, the S&P500 futures eased to 3917, and Nasdaq futures declined to 13611.

Metals

Precious metals prices rebounded slightly as the dollar dipped and Treasury yields surrendered partial gains. The price of a gold ounce rallied to $1785 after trading at $1769, the lowest in almost three months. The price of a silver ounce dipped to $27.10, palladium futures declined to $2365, and platinum held steady near $1255.

Oil

Oil prices extended upside rally supported by the storms in the United States which are impacting supply, the OPEC+ policy, and falling inventories. The Texas Cold snaps are shutting at least a fifth of the US refining output. Meanwhile, top oil producers are still compliant with their strategy, with whispers rising of Saudi Arabia refraining from the unilateral cuts in the March meeting. On the other hand, the American Petroleum Institute reported a decline of 5.8 million barrels in US inventories. Official figures by the US Energy Information Administration will be published later today. The West Texas Intermediate crude March delivery rallied to $62.24, and Brent Blend April contract rose to $65.48.

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