The US Dollar is losing traction, as US bond yields have slumped from the 14-month peaks touched last month, with the benchmark 10-year Treasury yield trading around 1.60%, reducing the greenback’s appeal. This follows repeated promises by the Fed that short-term price pressures are only temporary.
The Dollar Index, which tracks the Greenback against six other peers, edged up 0.21% on Tuesday, after bouncing off a low of 90.81. The outlook for the USDIndex remains bearish with visible indications from AO’s technical tools, and price movement below Kumo showing a quite deep retraction from the 89.65-93.44 price wave. As long as the 90.61 Support holds, there is technically a possibility that the price will return to the upside.
Meanwhile, US President Joe Biden earlier this month called for an end to gun manufacturers’ immunity, as he announced gun control measures. He suggested “accountability” measures should put arms companies on the same level as tobacco companies in terms of the harm their products could cause.
Tobacco stock prices led the losses in most major markets following news that the United States was considering reducing cigarette nicotine levels to less addictive levels. According to The Wall Street Journal report on Monday that the US Food and Drug Administration is expected to decide on a ban on menthol cigarettes by the end of the month, the Biden administration is also considering a ban, along with requirements to lower nicotine levels.
The Altria Group Inc.’s stock, which is Marlboro manufacturer, fell as much as 6.9% on Tuesday, losing more than $11 billion in market value since Friday. Ideas for cutting US nicotine levels cost Altria dearly, given that it controls 53% of the $90 billion domestic market. British American Tobacco Plc also fell as much as 8.3% in London. Imperial Brands Plc, which makes Kool cigarettes, fell by 7.5%.
Meanwhile, Philip Morris International Inc. was little changed on Tuesday after boosting its outlook for the year amid stronger demand for its IQOS cigarette alternative. Philip Morris, which does not sell cigarettes in the US, fell only 1.3% on Monday, outperforming rivals on the prospect that tighter tobacco regulations could spur demand for IQOS, according to CNBC.
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Ady Phangestu
Market Analysts – HF Educational office – Indonesia
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