High state-bond yields still support US dollar positions

Posted 24 April, 2018

On Tuesday, US dollar keeps staying strong against the majors taking benefit from the increasing state-bond yields. The currency is close to a multimonth peak now.
US Dollar index was seen at 90.77 today. Overnight the index even managed to exceed the highest level of 90.84 recorded since March.

Yesterday, 10-year US state-bonds reached the top-level over more than four years – 2.9985. The soaring yields are said to be related to the increasing chance for early interest rate revision by the Central Bank boosted by growing inflation prospects.

As a result, the euro-to-US dollar exchange rate plunged to 1.2193 by Tuesday. A similar development was seen in the GBP-USD pair – the sterling touched a month bottom at 1.3935.

At the same time, weaker sterling positions are also explained by the vague probability of the May interest rate increase. Notably, additional pressure came from the further Brexit talks

US dollar also peaked vs Japanese yen to 108.84. Demand for the yen as a safe haven slackens on improving the confidence of market insiders.

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