Back
4 Jun 2014
Declining yields keep weighing on the USD - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, notes the negative effect that falling US yields are having on the greenback.
Key Quotes
"There are numerous key events in the US this week that will be crucial for the dollar’s short and medium term outlook, but the strong support for the dollar, in particular versus the yen but also more broadly in circumstances of falling yields in the US and economic contraction in Q1 2014, does suggest better prospects ahead for the dollar. Since the start of the year, the DXY index is 0.7% higher despite 10-year US Treasury bond yields falling nearly 60bps, the US economy contracting by 1.0% in Q1 and expectations of Fed rate hikes falling by 25bps by the end of 2016."
"Of course, this is explained by the fact that the euro has declined in anticipation of monetary easing, including QE and by the fact that the yen has failed to advance given the aggressive scale of BOJ monetary easing. The DXY index bounced off the 79.00 level in May for the fifth time going back to October 2012 which does suggest that the scope on the downside for the dollar is now very limited."
Key Quotes
"There are numerous key events in the US this week that will be crucial for the dollar’s short and medium term outlook, but the strong support for the dollar, in particular versus the yen but also more broadly in circumstances of falling yields in the US and economic contraction in Q1 2014, does suggest better prospects ahead for the dollar. Since the start of the year, the DXY index is 0.7% higher despite 10-year US Treasury bond yields falling nearly 60bps, the US economy contracting by 1.0% in Q1 and expectations of Fed rate hikes falling by 25bps by the end of 2016."
"Of course, this is explained by the fact that the euro has declined in anticipation of monetary easing, including QE and by the fact that the yen has failed to advance given the aggressive scale of BOJ monetary easing. The DXY index bounced off the 79.00 level in May for the fifth time going back to October 2012 which does suggest that the scope on the downside for the dollar is now very limited."