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The dollar performance diverged after several comments on interest rates

2018-10-10 11:02 am | Resource: News | No Views : 34



 The US dollar was halted on Wednesday as US Treasury yields remained below seven-year lows, but demand for the dollar continued to support expectations that would likely raise interest rates from the Federal Reserve.

The dollar paused temporarily as yields on 10-year Treasuries fell after hitting a seven-and-a-half-year high on Tuesday. Rising bond yields have hurt demand for stocks in recent sessions, leading to a decline in risk appetite. The dollar posted strong gains this month after a number of federal officials' comments on interest rates

 Fed Williams: Increases in the gradual rate will boost growth

"The gradual increase in interest rates will further enhance sustainable economic expansion and meet our dual goals for the state," said John Williams, chairman of the Federal Reserve Bank of New York. He noted that the Fed is currently managing its targets for maximum employment and price stability "as ever."

However, Williams predicted that "with the normalization of Fed policy, it will not be clear whether interest rates need to rise or fall, and clear guidance on the course of future policy will not be appropriate." The US economy is forecast to grow by 3% this year and 2.5% in 2019. Unemployment is expected to fall below 3.5% next year, and inflation will exceed the Federal Reserve's target of 2% "slightly". "He said.

Money policy should be part of China's deal

In another context, US Treasury Secretary Steve Menuchin highlighted Italy's financial and fiscal outlook for the FT as a risk of proliferation, but also insisted there was no major concern yet. He focused on devaluation of the Chinese currency, stressing that the yuan fell "significantly during the year." The administration is considering the issue "very carefully" and believes the solution "should be part of" a comprehensive trade agreement with their counterparts in Beijing, the top US official said in an interview published Wednesday.

He added that President Donald Trump and his government "wanted to make sure" that the currency, also called the renminbi, was not used to reduce the value of competition in ongoing conflicts. Mr Menuchin also said he was aware that there were "different factors" for his weak exchange rate, namely economic challenges. Turning to the impact of the trade war, the Treasury Secretary confirmed that it was limited and in certain areas, such as lobsters and Bourbon.

Dollar Trading
  • The dollar index, which measures the strength of the dollar versus a basket of six major currencies, stabilized at 95.4 by 08:13 GMT,
  • The greenback was up against the yen, with rising 0.15% to 113.11.
  • The EUR did not change much, with EUR / USD trading at 1.1490, recording above last week's low of 1.1431.
  •  , With GBP / USD climbing 0.12% to 1.3159 after reports that UK exit conditions from the EU could be settled early next week.


Other analysis

USD/JPY Technical analysis 16 October 2018

Time frame Used - four hours The USDJPY is moving in a bearish direction in the near term The bears managed to control movement of the USDJPY to the support level of 111.60 which also represents 61% retracement of Fibonacci levels Accordingly, we expect that the USDJPY will test levels of 112.16 - 112.73 in a corrective move   The alternative scenario is that the USDJPY retreated to level of…

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