2024-01-16 18:58:46
U.S. dollar
The US dollar recorded strong increases during trading on Tuesday, breaching the 103-point barrier to reach its highest levels in more than a month, supported by statements from a number of the most hawkish members of the US Federal Reserve, along with a rise in US Treasury bond yields.
In the following lines, it can be clarified how these factors contributed to enhancing the upward momentum of the dollar’s movements today:
First: Statements by members of the US Federal Reserve
Recent statements made by a group of US monetary policy makers fueled the dollar’s rise in today’s currency market trading; US Federal Reserve member Waller confirmed that the central bank is not expected to rush and take the decision to lower interest rates in the near term, indicating that there are some upside risks around the path of inflation in the United States. He also made clear that the Federal Reserve will not rush to reduce interest rates at a strong pace.
These statements have contributed to fueling market expectations that the US Federal Reserve will not rush to abandon tight monetary policy and begin cutting interest rates early, in addition to keeping US interest rates at high levels for a longer period than expected, which eventually fueled the dollar’s rise.
Also, the dollar benefited from the statements of US Federal Reserve member Bostic, in which he warned of a slowdown in the pace of decline in inflation towards the central bank’s target of 2% in the coming months, indicating the possibility of inflation completely stopping its decline for a period of time, which fueled the same belief that the Fed would maintain prices. The current interest rate and not rushing to reduce interest rates, which reflected positively on the dollar’s performance.
Second: The strong rise in US Treasury bond yields
The sharp rise in US Treasury bond yields of various terms contributed to enhancing demand for the dollar during today’s trading. The 10-year US Treasury bond yield recorded a strong rise by 3.34% to 4.081%, and the 20-year US Treasury bond yield jumped by about 2.83% to 4.430%. At the same time, the 30-year US Treasury bond yield rose by about 2.73% to record 4.312. %.
How were these developments reflected on the dollar’s performance?
In terms of currency market trading on Tuesday, the US dollar index (which measures the performance of the greenback against a basket of other currencies) jumped by 0.71% to record 103.40 points.
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