Exchange Rate: US Dollar Closing To Its Two and A Half Week Peak Yields

May 21, 2019 | Tuesday



On Tuesday, the United States dollar steady close to its two and a half week high. That mostly led by higher U.S. yields with its safe-haven status. It also led by a greater concern in the U.S.-China trade dispute and the worsen Washington blows on the Chinese tech giant - Huawei.

The U.S. dollar index facing its six major currencies were mostly higher at 97.965 upon reaching 98.036 overnight. That was its highest since last May 3.

According to Takuya Kanda, general manager at Gaitame.Com Research Institute, the U.S. dollar brings itself within a safe-haven and gaining greater demands at such times like this. That with equities dropping at the same time a rise in the market volatility. Kanda added that the bounce led by the Treasury yields also supports the U.S. dollar to its peak. Moreover, the previous drops of about 10-year yield are eliminated, with the Fed's Powell not disclosing clear information regarding a rate cut in 2019. Kanda also believes that the comeback in yields is to continue as of now.

Meanwhile, the Federal Reserve Chair Jerome Powell on Monday said it is premature to evaluate judgment regarding the impact of tariff and trade issues on monetary policy.

The Treasury note yield stretches its overnight comeback and brushing the eight-day peak of 2.428 percent. Just last week, the yield slipped to 2.354 percent. That's its lowest since March 28.

According to Daisuke Karakama, chief market economist at Mizuho Bank, within the industrialized nations, Italy is the only one having a 10-year yield greater than the United States. On that scenario, buyers have a better choice to turn to the U.S. dollar.

The Italian government bond has yielded 2.705 percent, led by domestic political uncertainty. In addition, the country's increasing debt. Meanwhile, the German and Japanese yields are at minus 0.088 percent and at minus 0.05 percent, respectively.


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