The dollar is continuing to gain ground against other major currencies
The US dollar is carrying the momentum from the first trading session of the year and is continuing to gain ground against other major currencies. The greenback gains come from a wave of ‘New Year-optimism’, with investors believing that, despite the escalation in the number of new COVID cases, the disease is now sufficiently mild to not derail the economic recovery. This positive sentiment has spread across the markets, strengthening the case for those who expect the Federal Reserve to hike interest rates at least 3 times in 2022, pushing US Treasury yields to reach highs not seen since late November, a dynamic that is supportive of further dollar gains.
The price of gold is rising this Tuesday, with investors seeking the safety of the precious metal as some countries tighten measures to contain the escalation in the numbers of new Omicron cases. Nevertheless, any gains will be capped by developments in the US, where the dollar continues to strengthen on the back of higher Treasury yields, with the markets holding firm to the belief that the Federal Reserve will hike interest rates at least 3 times in 2022.
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