The dollar was noted as being steady on Wednesday and this is after a four-month high was reached. The US 10-year hold hit 3% for the very first time since 2014 and Wall Street stocks really did slow down the pace for the greenback.
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The greenback had risen without a pause and this happened throughout the whole of last week. This is partly due to the tension between the US and China. The trade conflict woes are certainly having an effect but they seem to have died down since. This has given the market the chance to turn its own attention back to the supportive fundamentals of the dollar. This is especially the case when you look at the surge of US yields.
The deal for the 10-year treasury reached a total of 3% and this is for the first time in well over 4 years. This happened overnight and as a result, a slide happened on Wall Street. This weighed on the dollar. The currency was higher at 108.935 yen and this shows that it has made a pullback from a 2 and a half month high of being at 109.200. This is when the S&P and then the DOW posted that they have had their biggest declines since the 6th of April.
The weakening equities are very supportive for the yen and this is often sought after when stocks fall. This is because it is known as being a safe-haven. Analysts however have stated that the dollar is still being put ahead and that it may even go on to experience further gains as a result.
When you look at it from a first glance, you will see that the equities are much more measured and that the yen is getting its demand from the total risk involved. Experts have stated that this is not nearly as strong as it was before. The market’s attention has now come full-circle and it is settling on interest rate differentials and this is probably going to keep on pushing the dollar forward.
The spreads that are between the US yield and even those who have Japanese and European counterparts really have widened significantly and there are now plenty of monetary policy expectations as well. The week gap between the US and the government bond has also hit its widest point in over 29 years and the spread is the broadest that it has been in well over 10 years.
The Treasury rose by well over 3% on Tuesday and this just goes to show that the US economic expansion is very durable. You have inflation that has been accelerated and you also have the increasing debt supply as well. Wall Street has made a sharp turn as well and this is because higher costs are coming from the surge in yields. The pound was 0.05% higher when compared and this puts it at 1.3989. It is crawling away from its one-month low which happened on Tuesday.
The Australian dollar also traded in at $0.7596 and this has been in a four-month slump.