In context of a latest cohort of a broad-based weakness in American currency, the US Dollar closed out sharply lower on Friday alongside US Treasury bond notes with 10-year bond yields hovering at 1.56 per cent, below about 4 percentage points from last week’s closure, as a raft of upbeat economic data in the United States and eurozone, illustrating a solid rebound in economic activities, had ramped up investors’ appetite for riskier assets.
In point of fact, over recent weeks, US Dollar has been largely hinged on US Treasury bond Yields, while Friday’s FX market had echoed a similar façade with US Treasury bond Yields being plunged to 1.56 per cent after surging to a 14-month peak of 1.77 per cent earlier in the month, which in effect seemingly had driven up the diversifications away from the US Dollar to riskier assets.
Apart from that, upbeat economic data in the US and euro zone had added to further bullish wing to investors’ optimism, as US NAR (National Association of Realtor) had told that the US new home sales surged more than 20 per cent last month, while an IHS Markit survey report had revealed that US manufacturing PMI (Purchasing Managers’ Index) had hit the strongest level since August 2007.
On top of that, market participants’ optimism of a solid economic recovery on both sides of the Atlantic stepped up after an IHS Markit survey report had unleashed that its index for euro zone flash composite PMI (Purchasing Managers’ Index) gained more-than-anticipated on early-April, adding a maverick boost to euro, the region’s common currency shared among 19 eurozone member states.
Aside from that, worries over a likely dovish policy stance from the US Federal Reserve at its next week’s meeting, added to further strains for the US Dollar.
US Dollar falls as Treasury bond yields languish
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 tumbled 0.52 per cent to 90.80, a level never seen since early-March, while eurozone’s common currency euro jumped 0.69 per cent to $1.2098 following a late-afternoon rally.
Aside from that, the American currency faltered 0.07 per cent to 107.88 against the safe-haven Japanese yen, while another safe-haven currency Swiss Franc gained as much as 0.43 per cent against its American peer to $0.9129.
In tandem, Australian dollar, a closely monitored proxy for the health of global trade outlook, climbed 0.67 per cent to $0.7759 against the greenback. Meanwhile, addressing to the prospects of a further high-tide in major currencies against the greenback next week, a chief market strategist at Bannockburn Global Forex in New York, Marc Chandler said, “This is thin markets on a Friday afternoon.
The euro making new highs for the week late in the day suggests it is going to have momentum into next week. ”