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Analysts at HSBC are skeptical about the sustainability of the US dollar’s recent bounce, which has been supposedly fueled by the rise in Treasury yields. The 10-year yield rose to a 10-month high of 1.18% on Tuesday. 

“The most recent relationship between the currency and risk appetite as measured by the S&P 500, is stronger than the relationship between the relevant two-year yield differentials,” analysts said, adding that yields at the front-end (short duration bond yields) need to rise to have a material impact on exchange rates. 

The dollar index, which tracks the greenback’s value against majors, is now hovering below 90.00, having rallied from 89.21 to 90.73 in the four trading days to Jan. 11.