Higher Treasury yields boost dollar
NEW YORK (Reuters) - The U.S. dollar index traded near one-week highs on Thursday as Treasury yields edged higher, after minutes from the Federal Reserve’s September meeting showed that Fed policy makers are largely united on the need to raise borrowing costs further.
That came despite U.S. President Donald Trump’s view that interest rate hikes have already gone too far.
Benchmark 10-year Treasury yields have jumped to 3.21 percent US10YT=RR, from around 3.17 percent before the minutes of the U.S. central bank’s Federal Open Market Committee (FOMC) meeting were released on Wednesday, supporting a higher dollar.
“The Treasury market leaked higher in yield yesterday following the FOMC minutes, and that got a bit of attention,” said Brian Daingerfield, a macro strategist at NatWest Markets in Stamford, Connecticut.
“For the broader dollar, the interplay is how does the dollar trade relative to what’s going on interest rates and what’s going on in the broader risk environment?” Daingerfield said.
The dollar index measuring the greenback against a basket of currencies .DXY gained 0.14 percent on the day to 95.711, just below a one-week high of 95.775 reached in overnight trading.
China's currency traded CNH=D3 near a three-month low against the dollar at 6.9490 yuan per dollar, after a semiannual report by the U.S. Treasury refrained from naming China a currency manipulator but showed concern about yuan depreciation.
“Of particular concern are China’s lack of currency transparency and the recent weakness in its currency,” said Treasury Secretary Steven Mnuchin.
By stating that the Treasury will monitor and review the yuan’s moves over the coming six months, “the U.S. explicitly noted that it stands ready to name China in its April 2019 report,” Citigroup analyst Calvin Tse said in a report.
Deutsche Bank strategists termed the Treasury report “as a bit of an escalation without being too dramatic.”
Additional reporting by Saikat Chatterjee in London; editing by Jonathan Oatis
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.  |