The risk-on mood helped the dollar climb against currencies such as the Japanese yen,, which had lost 0.6 per cent overnight, and the confidence-sensitive Australian dollar also found buyers.
The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.15 per cent to 96.444. The euro fell 0.35 per cent at $US1.1245, while the yen gained 0.15 per cent at $US113.63.
Expectations the Federal Reserve will accelerate the tapering of its bond-buying program when it meets next week in response to a tightening labour market also supported the dollar.
The yield on 10-year US Treasury notes rose 1.4 basis points to 1.448 per cent.
People believe the Fed will do more, and sooner, to fight inflation, said David Petrosinelli, senior trader at InspereX, referring to a flattening of the yield curve measuring the gap between yields on two- and 10-year Treasury notes.
“The front end is focused on the Fed tightening policy because they need to, and the back end is more recognition that this economy probably is going to slow down in the first quarter,” he said.
Safe-harbor German government bonds went the other way with yields – which move inversely to prices – up 1.7 basis points to negative 0.37 per cent after falling to a three-month low on Monday.
The equity gains also came after China’s central bank injected its second shot of stimulus since July by cutting the amount of cash that banks must hold in reserve.
Uncertainty about its property sector remained, however, as Evergrande teetered on the brink of default again. But data showing stronger import growth was “a positive sign on the strength of domestic demand,” RBC analyst Adam Cole said.
Shares of embattled developer Evergrande edged off a record low as markets waited to see if it had made an already-overdue $US82.5 million ($116 million) bond payment or formally slumped into default.
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Elsewhere, oil prices climbed by about $US3 on hopes Omicron will prove less damaging and as the prospect of an imminent rise in Iranian oil exports receded.
Brent crude added $US2.85 to $US75.93 a barrel. U.S. crude rose $US3.15 to $US72.64 a barrel.
Reuters
