AIRLINK 189.36 Increased By ▲ 1.33 (0.71%)
BOP 11.10 Decreased By ▼ -0.76 (-6.41%)
CNERGY 7.28 Decreased By ▼ -0.26 (-3.45%)
FCCL 36.65 Decreased By ▼ -1.14 (-3.02%)
FFL 14.95 Decreased By ▼ -0.29 (-1.9%)
FLYNG 26.19 Increased By ▲ 0.66 (2.59%)
HUBC 130.89 Increased By ▲ 0.74 (0.57%)
HUMNL 13.47 Decreased By ▼ -0.14 (-1.03%)
KEL 4.28 Decreased By ▼ -0.07 (-1.61%)
KOSM 6.08 Decreased By ▼ -0.09 (-1.46%)
MLCF 45.94 Increased By ▲ 0.26 (0.57%)
OGDC 201.86 Decreased By ▼ -4.57 (-2.21%)
PACE 6.12 Decreased By ▼ -0.26 (-4.08%)
PAEL 38.36 Decreased By ▼ -1.95 (-4.84%)
PIAHCLA 16.73 Decreased By ▼ -0.22 (-1.3%)
PIBTL 7.94 Decreased By ▼ -0.09 (-1.12%)
POWER 9.86 Decreased By ▼ -0.17 (-1.69%)
PPL 173.46 Decreased By ▼ -5.38 (-3.01%)
PRL 34.73 Decreased By ▼ -1.63 (-4.48%)
PTC 23.95 Decreased By ▼ -0.44 (-1.8%)
SEARL 101.74 Decreased By ▼ -1.42 (-1.38%)
SILK 1.07 No Change ▼ 0.00 (0%)
SSGC 32.70 Decreased By ▼ -3.54 (-9.77%)
SYM 17.93 Decreased By ▼ -0.30 (-1.65%)
TELE 8.14 Decreased By ▼ -0.24 (-2.86%)
TPLP 12.02 Decreased By ▼ -0.14 (-1.15%)
TRG 67.40 Increased By ▲ 0.07 (0.1%)
WAVESAPP 11.80 Decreased By ▼ -0.21 (-1.75%)
WTL 1.52 Decreased By ▼ -0.05 (-3.18%)
YOUW 3.90 Increased By ▲ 0.01 (0.26%)
BR100 11,819 Decreased By -87.9 (-0.74%)
BR30 35,000 Decreased By -554.1 (-1.56%)
KSE100 112,085 Decreased By -478.8 (-0.43%)
KSE30 34,946 Decreased By -148 (-0.42%)
Markets

Bond yield rally pushes dollar up, euro falls ahead of ECB

NEW YORK: The dollar hit a four-month high on Wednesday, boosted by the benchmark U.S. Treasury yield, which continu
Published 26 Apr, 2018 12:40am

NEW YORK: The dollar hit a four-month high on Wednesday, boosted by the benchmark U.S. Treasury yield, which continued its rise after breaking through 3 percent on Tuesday for the first time in four years.

The 10-year U.S. Treasury yield rose 5.2 basis points to 3.035 percent on Wednesday, driven by worries about the growing supply of government debt and inflationary pressures from rising oil prices.

That has caused U.S.-Japan and U.S.-German yield differentials to widen further in the dollar's favor, leaving the yen and the euro lower.

Analysts on Wednesday saw signs the dollar could be recovering after months of relative weakness.

"The market is coming to the realization that U.S. growth is actually good. And Q1 data is probably not going to be as bad as some of the pessimists expected," said Thierry Wizman, global interest rates and currencies strategist at Macquarie Limited in New York.

U.S. first-quarter gross domestic product data due on Friday could determine whether the dollar extends its gains. Growth expectations have been cut significantly since the start of the year: the Atlanta Federal Reserve cut its forecast to 2.0 percent from 4.2 percent in January. But that 2.0 percent is a step up from the 1.9 percent forecast on April 16, suggesting optimism.

The dollar's performance against a basket of major currencies rose as high as 91.241 in New York trade, its strongest level since Jan. 12.

The dollar's gains on Wednesday drove the euro down past the two-month low hit on Tuesday because of concerns that firmer U.S. yields would reduce demand for the region's bonds at a time when hedge funds have amassed record long euro bets.

Analysts say the market needs clarity about the European Central Bank's pace of planned rate hikes before the euro can break higher.

In early 2018 traders bet that synchronized global growth would force the ECB to accelerate monetary policy normalization. But weak data suggests there will be no change to interest rates announced at the end of the central bank's meeting on Thursday.

"We don't foresee the ECB making any changes at all until September, when the QE program officially ends," said Alfonso Esparza, senior currency strategist at Oanda Corporation in Toronto, Canada, referring to the bank's purchases of bonds.

The Mexican peso also continued to weaken on Wednesday, breaking through 19 to the dollar to hit a 2018 high of 19.143 pesos per dollar. The fall extends a seven-day weakening that started on April 17, when it opened at 18.002 pesos to the dollar.

The currency has been weakening on polls showing left-wing presidential candidate Andres Manuel Lopez Obrador in the lead ahead of the July 2018 general election.

Against the yen, the dollar hit a two-month high of 109.38 yen.

Copyright Reuters, 2018
 

Comments

Comments are closed.