On Monday, the American currency had been thumped down to a six-week low against most major and emerging market currencies, extending its latest run of losing streak, and US Treasury bond notes were hovering close to their five-week lows despite the Federal Reserve’s remarks that any spike in inflation indicators would likely to be shortlived.
Aside from frets over an inflation-surge alongside further a slip-off of US Treasury bond Yields from a 14-month peak of 1.77 per cent hit later last month, a broad-based hike in appetite for riskier assets alongside a rally in global equity indices to record closing highs, appeared to have weighed heavily on the American Dollar.
In point of fact, latest headwind in US Dollar Index that fell to a six-week low amid a subdued US Treasury bond notes with 10-year US Treasury bond Yields hovering at 1.59 per cent, came forth amid growing investors’ jitters over a plausible hike in interest rate as US inflation has been heating up following disbursement of a $1.9 trillion American Rescue Plan, endorsed and signed off in to a law by the US President Joe Biden back in early-March.
US Dollar caught off-guard amid subdued Treasury bond yields
Citing statistics, in the day’s FX market closure, the US Dollar Index (DXY) measured against a basket of six major currencies on an average, plunged as much as 0.54 per cent to 91.02, while against safe-haven Japanese Yen, the American currency shrugs off 0.59 per cent to 108.14 yen per Dollar.
Safe-haven Swiss Franc, in tandem, added 0.49 per cent to $0.9152 against its American counterpart. Aside from that, the bloc’s single currency euro, shared among 19 eurozone member states, gained 0.45 per cent to $1.2035, while the British Pound surged as much as 1.09 per cent to $1.3986 against the greenback.
Besides, the Australian Dollar, often contemplated as a proxy for risks in global trades, added 0.30 per cent to $0.7757, while New Zealand Dollar rose 0.51 per cent to $0.7182 against its American peer. Meanwhile, referring to a stronger global equity market amid a high-flying kickstart of latest earnings’ season which in turn would more likely to add further strains on the greenback, a head of research at Pepperstone Market Ltd., a FX broker in Melbourne, Chris Weston said, “The fixed income market will dominate my world this week, with the risk currently skewed to further yield declines, pressuring the dollar. ”