US dollar Steady, waiting for Jackson Hole?

US 10-year treasury back above 1.187

By: Ahura Chalki

Market analyst – IFC Markets

After RBA and ahead of BoE, investors may wait for more Hawkish signals and policies. 

Early Tuesday, the Australian central bank held the Interest rates. Despite the lockdowns and restrictions in some cities across the country, it decided to continue its tapering plan for Bond purchasing amounts. It sent a clear Hawkish message for financial markets and investors. A bit later, RBNZ, in response to the House price inflation, said they have to review their plans and find a better way to control it. 

Tomorrow also, we will have the BoE meeting in London, where market participants amid optimism about the British economy are waiting for a Hawkish tone, at least in the Statement and outlook, even if not in the decisions. 

The 10-year US Treasury yield slipped again early on Tuesday as low as 1.151%, the lowest level since Jun 2020, before coming back in the afternoon in the New York season to near Monday’s level of 1.179%. The 10-year yield has generally been trending downward since the end of March. Currently, in the early trading season of the Asian Market, it is at 1.187%.

As we can see more and more decline in the US ten-year Yield, we can accept it as a sign of disappointment between the market participant and investors in economic growth, especially now, and with the latest outbreak of virus spreading in the US and China.

USD Index was flat and flirting around 92 level beginning of August. USD against Euro is also steady around 1.1870. Since August started, USD spent three conservative tweaking days again: Swiss Franck, Japanese yen, and British pound. 

Joe Manimbo, senior market strategist at Western Union: “The Swiss franc and the yen are benefiting as rising coronavirus cases cloud the outlook for growth,” 

Last week while we had the previous FED meeting before the summer Holiday, Federal Reserve policymakers said that lower rates and bond purchasing would be continued as long as the labor market need, which again caused a 1% fall in the dollar rate.

With all signals and data in the market, we do not expect significant moves in the dollar before Friday’s US jobs report. However, the main movement and direction must come after the symposium of central bankers in Jackson Hole, Wyoming, in late August. 


US dollar Steady

Risk Warning: Trading-Leveraged Products such as Forex and Derivatives may not be suitable for all investors as they carry a high degree of risk to your capital. Please ensure that you fully understand the risks involved, considering your investment objectives and level of experience, before trading, and if necessary, seek independent advice.

Related post