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Dollar Remains Strong on Treasury Yields to Start the Week

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U.S. Treasury yields are at their highest level in over two months, sending the dollar higher on Monday. The dollar index is up 0.47% in early-morning trading. Catalonia protests following an independence vote caused uncertainty among investors. Spanish borrowing costs also rose on Monday, leading to a stronger dollar.

Treasury yields are higher as investors expect the U.S. Federal Reserve will raise the interest rate for a third time before the end of the year.

Treasury yields pulled back slightly early in the day, with the 10-year yield up 1.3 basis points instead of the 4 basis points it was up earlier in the day.

GBP/USD hit its lowest level since mid-September and is down 0.96% to 1.3268. The British pound is down on UK manufacturing sector data. The data showed that the sector expanded in September, but at a slower-than-expected rate.

USD/JPY is up slightly to 112.61, a 0.10% gain. USD/CHF is up 0.21% to 0.9705.

Japan’s manufacturing confidence is at its highest level in a decade. The yen’s weakening and stronger global demand are key factors behind the confidence rise. AUD/USD is down 0.18% to 0.7822. The New Zealand dollar retreated 0.59% in early-morning trade before rebounding slightly to 0.7198, down 0.43% on the day.

USD/CAD continues to remain strong after hitting a four-week high on Friday. The pairing is up 0.29% to 1.2504.

Spain’s IBEX stock index fell 1.4% as the Catalan referendum impacted the index. The referendum had a limited impact on the euro. Spain’s 10-year bonds remained strong despite the vote. The bonds rose 7 basis points to hit 1.69 percent.

Catalan’s vote, yet to be official, is stated to be 90% in favor of succession, according to Catalan officials. The vote may lead to Catalan a declaration of independence. The vote is expected to cause political conflict in the region.