US Dollar Flat As 10-Year Treasury Tops 1% Amid Georgia Special Election

The US dollar is struggling to find direction in overnight trading as the Georgia runoff elections go down to the wire. With control of the US Senate in the balance, financial markets have been paying close attention to the electoral outcome of the race that is critical for both parties. The result could have a considerable impact on fiscal policy moving forward.

With 97% of precincts reporting in, Senator David Perdue (R-GA) is leading his Democratic challenger, Jon Ossoff, by a little more than a thousand votes. The Associated Press declared Democrat Raphael Warnock the winner over incumbent Senator Kelly Loeffler (R-GA), with 50.4% of the vote. Loeffler has yet to concede, noting that there was “still a path to victory.”
Most media outlets have reported that the Ossoff-Perdue race is still too close to call.
This was a crucial electoral battle for the GOP and Democrats. If the Democrats regain control of the US Senate, President-Elect Joe Biden can push through his agenda with minimal difficulty. Should the Republicans maintain control of the Senate, they could thwart Biden’s policy initiatives.
In the short-term, financial markets might have championed a Democratic victory in the Peach State because it would allow Biden to move ahead with more significant fiscal stimulus. At the same time, it would add bearish pressure on Treasurys amid greater inflation expectations. When the coronavirus pandemic is decimating the US economy, more stimulus and relief spending would potentially limit the damage.
The financial arena’s biggest development was the 10-year US Treasury yield topping 1% for the first time since March during overnight trading. Some market analysts think it could reach as high as 1.2% this week. The benchmark rate breached the key psychological level as the rest of the bond market trended higher. The one-year note rose 0.006% to 0.107%, while the 30-year bond surged 0.074% to 1.778%.
On the data front, the Institute of Supply Management (ISM) released its December manufacturing data, highlighting a remarkable rebound in the sector. New orders, prices, employment, and the purchasing managers’ index (PMI) recorded notable gains last month.
Later this week, the December labor report will be released, and the early estimates show 100,000 new jobs and an unchanged unemployment rate of 6.7%.
The US Dollar Index, which measures the greenback against a basket of currencies, was flat at 89.44. The DXY has had a rough start to 2021, sliding 0.55% and extending its downward trend from 2020.
The USD/CAD currency pair fell 0.04% to 1.2666, from an opening of 1.2670. The EUR/USD advanced 0.16% to 1.2321, from an opening of 1.2298.
If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

Original from: www.earnforex.com