Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar Edges Higher; Treasury Yields Rise After Powell's Comments

Forex Mar 18, 2021 04:05AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Peter Nurse - The dollar pushed higher in early European trading Thursday, helped by rising U.S. Treasury yields even after the Federal Reserve reiterated that it was in no hurry to raise interest rates while predicting strong growth in the world’s largest economy.

At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.2% at 91.602, climbing from the low of 91.295 seen earlier in the session. 

USD/JPY was up 0.3% at 109.18, near the nine-month high hit earlier this week, as the Bank of Japan starts its two-day policy meeting, ending on Friday. A Nikkei report earlier Thursday said the BOJ is expected to slightly widen an implicit band at which it allows long-term interest rates to move around its 0% target.

EUR/USD fell 0.2% to 1.1957, but not far removed from its one-week high of 1.1989, while the risk-sensitive AUD/USD climbed 0.2% to 0.7812.

Chairman Jerome Powell made it pretty clear, as he handed down the central bank's latest policy decision on Wednesday, that the Fed would be sticking to its easy money policies for some time, even while predicting a strong economic recovery and a jump in inflation above target.

The Fed predicted that the economy would grow 6.5% in 2021, the largest annual jump in GDP since 1984 and a hefty increase from the 4.2% growth projected just three months ago. It saw core personal consumer expenditures - its favored measure of inflation - at 2.2% by the end of the year, and remaining marginally above 2% for the next two years.

The yield on the benchmark 10-Year U.S. Treasury note climbed above 1.73%, its highest level in more than a year, providing support for the greenback in the wake of Powell’s dovish comments.

“Four out of eighteen FOMC members see a rate hike in 2022 compared to only one in December,” said analysts at Nordea, in a research note, “which is another way of showing that the Fed has turned more upbeat, but they remain extremely cautious in terms of sounding just barely tightening biased and a clear consensus still refrains from hinting of any hikes at all.”

Elsewhere, GBP/USD fell 0.1% to 1.3948, having gained around 0.5% overnight. The Bank of England is not expected to change its monetary policy stance when it meets later Thursday, but it probably will emphasize its high bar for tightening monetary policy even as the economic outlook brightens.

Looking at the emerging markets, USD/TRY rose 0.8% to 7.5601, ahead of a meeting by Turkey’s central bank, which is expected to result in a rise in borrowing costs.  The Indonesian rupiah was stable after Bank Indonesia left its key rate unchanged, while the Brazilian real was holding on to a 0.8% gain after the Brazilian central bank delivered the biggest interest-rate increase in more than a decade in order to tame inflation, hiking by 75 basis points to 2.75%, and becoming the first Group of 20 country to lift rates this year.

USD/BRL rose 0.1% to 5.5845 in early European trading.

Most economists see the central bank lifting its benchmark interest rate by 100 basis points to 18%, in order to combat soaring inflationary risks given the recent rises in oil prices and lira volatility.

Dollar Edges Higher; Treasury Yields Rise After Powell's Comments

Related Articles

Speculators cut long U.S. dollar bets in latest week
Speculators cut long U.S. dollar bets in latest week By Reuters - Aug 12, 2022 6

(Reuters) -Speculators decreased their net long U.S. dollar positions in the latest week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
hsam alae
hsam alae Mar 18, 2021 5:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email