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Weekly roundup: US dollar bolstered by rising US Treasury yields

currency-newsWeekly roundup: US dollar bolstered by rising US Treasury yields
After a relatively quiet start to the week due to holiday thinned-trade, the US dollar rose sharply in tandem with US Treasury yields, which soared to a two-year high.

This came amidst growing expectations the Federal Reserve will hike interest rates in March and follow this up to three more hikes throughout the year.

The uptick in the US dollar was also supported by geopolitical tensions, with skittish investors favouring the safe-haven currency amidst growing concern Russia will invade Ukraine.

However it wasn’t all plain sailing for the US dollar, with the currency facing some pressure in the second half of the session after the previous week’s initial jobless claims showed a surprise increase in new claims.

Also weakening USD sentiment in the latter half of the week as a modest pullback in US Treasury yields, as well as an improvement of market risk appetite.

Centre stage this week will undoubtedly be the Fed’s first interest rate decision of the year. No policy changes are expected from the US central bank this month, but some hawkish forward guidance from the Fed could help to propel the US dollar sharply higher.

Also of note will be the publication of the latest US GDP figures in the second half of the week. These could also bolster USD exchange rates as economist forecast US economic growth will have accelerated in the last quarter of 2021.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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