U.S. dollar slumps as projections of Fed lifting rates subsides; Yields still down

US dollar

The U.S. dollar was depreciated against its major opposing currencies on Monday’s session. The greenback losses grip when U.S. Treasury yields are still declining on the back of fading projections that the Fed will incite another interest rate hike this 2017.

With expectations subsiding all throughout the week, global investors are still concerned of another rate hike this year as figures in the United States, which is stable, fell short of forecast. Tokyo IG Securities’ senior FX strategist Junichi Ishikawa said that the primary reason behind the dollar’s sluggishness is the U.S. Treasury yields being trapped at low altitude, given that it (dollar) already lost momentum in the midst of Fed’s rate hike.

He added that yields seemed to better mirror the fundamentals in the U.S. relative to its equities. Various indicators that are set to be released and political developments are also the center of attention today. Consumer confidence indicator for this month, crude oil stockpiles, pending home sales, the PCE price index and revised quarter gross domestic product (GDP) are figures scheduled to be released next week.

The index that tracks the value of the greenback against its major opposing currencies, the U.S. dollar index, was slightly down by 0.4 percent at 97.239. It jumped to its one-month peak of 97.871 on the previous week as it was brought up by expectations that the Federal Reserve would tighten monetary policy again this coming September.

Meanwhile yields on the Treasury note subsequently rose following the same news that Fed tightened policy this June. However it was still slipping since expectation of low inflation continued to strengthen the demand for longer-dated debt.

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