The weak corporate results that prompted concerns about the state of the economy and the increase in Treasury rates on Wednesday caused investors’ desire for riskier currencies to wane, which in turn caused the U.S. dollar to appreciate versus a basket of currencies.
As a result of Alphabet’s cloud division missing revenue projections and other mega-cap companies eroding due to increasing U.S. Treasury rates, risk sentiment soured.
Chief foreign exchange strategist at Scotiabank in Toronto Shaun Osborne stated, “I think it is mainly a risk backdrop story.” “Wide USD gains appear to be being driven by a weak risk appetite.
Typical US 10-year Treasury rates increased little, continuing their ascent towards a 16-year record of 5.0% that was momentarily surpassed on Monday. The most recent 10-year yield was at
49162
As %.
An increase in U.S. bond rates has engulfed global financial markets, pushing the dollar index to its highest level in over a year earlier this month.
Nonetheless, analysts believe that the dollar and rates have little potential to increase in value.
“My inclination is to look at these gains as an opportunity to fade some of the dollar strength against certain currencies,” Scotiabank’s Osborne said.
In other news, the Australian currency strengthened on Wednesday following surprisingly strong inflation data that fueled expectations of a further rate rise and weighed heavily on bond futures. However, it eliminated all of those gains to decrease
0.52%
% of the time.
“What’s interesting about Australia is that it’s central bank situation is very similar to many other central banks.” The market is hopeful that this pause will be it, but everyone is holding their breath in the hopes that inflation would behave itself. In Australia’s case, it hasn’t, according to Jane Foley, head of FX strategy at Rabobank.
As global interest rates climb, pressure is building on the Bank of Japan to alter its bond yield control policy. In the lead-up to next week’s policy meeting, a raise to the current yield cap, which was imposed just three months ago, is being considered as a possibility, sources told Reuters this week.
“There is a decent chance there will be a another tweak to yield curve control,” Foley stated. “If we don’t see that, it is quite possible that we will see the other side of 150 quite soon.”
Bitcoin was up 1.39% at $34,390 as of Wednesday night, continuing to cling to its almost eighteen-month high set on Tuesday.
The biggest cryptocurrency in the world has increased in value by almost 15% this week due to conjecture about the impending launch of an exchange-traded bitcoin fund.