Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Dollar Gains on Soaring Yields; Sterling Slumps on Political Strife

Forex Jun 07, 2022 02:51AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
EUR/USD
+0.78%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GBP/USD
-0.06%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
USD/JPY
-0.66%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AUD/USD
-0.58%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US10Y...
-0.26%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DXY
-0.60%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Peter Nurse

Investing.com - The U.S. dollar climbed in early European trade Tuesday after a hefty rate hike by Australia’s central bank prompted further inflation concerns, causing U.S. bond yields to soar.

At 2:50 AM ET (0650 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 102.623.

The Reserve Bank of Australia raised its key rate by 50 basis points earlier Tuesday, a more hawkish move than the 25 basis point increase that most had expected, while also committing to doing "what is necessary" to cool inflation.

AUD/USD climbed as high as 0.7243, before handing back most of the gains to stand 0.1% higher at 0.7199.

The fact the Australian policymakers felt the need to increase interest rates by a hefty half a percentage point has caused nerves to fray ahead of Friday’s U.S. consumer price figures, especially after the strong U.S. jobs data at the end of last week.

The May CPI release will provide more clues on the Fed's rate-hiking path, ahead of next week's policy decision, and concerns are growing that upward price pressures will be around for longer, potentially forcing more aggressive action from the Fed.

The 10-year U.S. Treasury yield was last seen trading at 3.047%, at levels seen for the first time in nearly four weeks.

This resulted in USD/JPY soaring 0.6% to 132.69, climbing to a fresh two-decade high, with the yield differentials weighing heavily on the yen as the equivalent Japanese yields are pinned near zero.

EUR/USD fell 0.1% to 1.0688 after German factory orders fell 2.7% on the month in April, suggesting the Eurozone’s largest economy looks set for at least one quarter of economic contraction.

That said, the main focus is on Thursday's meeting by the European Central Bank, which is expected to prepare the ground for an interest rate hike at its July meeting.

“Markets are attaching a close-to-zero probability of a rate hike, which would be in contrast with recent ECB communication indicating July as the start of the tightening cycle,” said analysts at ING, in a note.

GBP/USD fell 0.5% to 1.2469 after U.K. Prime Minister Boris Johnson survived a vote of no-confidence overnight but was left severely weakened.

Even without the political turmoil, “the pound remains vulnerable in the short term given worsening growth prospects and a potential re-pricing of BoE rate expectations,” said ING. “A break below 1.2500 in cable could see the pair extend losses to the 1.2300-1.2350 area this week.”

Dollar Gains on Soaring Yields; Sterling Slumps on Political Strife
 

Related Articles

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 Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
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 (2)
AAA Oooo
AAA Oooo Jun 07, 2022 4:43AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
امك عندي
Randall Paul
Randall Paul Jun 07, 2022 3:31AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
they may surprise and be more aggressive
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
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 Investing.com'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
or
Sign up with Email