The USD continues to soften and marks lows from 2 wks ago Vs a basket of currencies Wednesday in Asia, this after US bond yields declined as traders unwound their aggressive expectations that the Fed will tighten its policy earlier than Chairman Powell said it would.
,DXY index marked 92.314, slipping further from a 5-month high at 93.439 set on 31 March.
EUR rallied to a 2-wk high of $1.18785 and last stood at $1.1871. The common currency jumped almost a p against the GBP overnight to trade at 85.90 p, its biggest gainer since 10 December 2020.
The Buck changed hands at 109.77 JPY, extending its retreat from a 1-yr high of 110.97 tapped a wk ago.
The Greenback’s decline comes as investors/traders rethought their expectations that the Fed will tighten its policy earlier than it has suggested.
The financial markets expected accelerating US economic growth and inflation could force the Fed to abandon its pledge earlier, with interest rate futures pricing in a rate hike as early as late Y 2022 earlier this wk.
The 5-yr US T-Note yield dropped sharply to 0.874% after hitting a 14-month high of 0.988% Monday.
The 5-yr Treasury is now seen as a major barometer of how much faith investors have in the Fed’s pledge that it does not expect to raise interest rates until Y 2024.
Traders saw the Buck’s retreat as a correction after its rally last month. In particular, against JPY, the USD made its biggest monthly gainers in more than 4 yrs in March, rising almost 4%.
Elsewhere: the Aussie held firm near 2-wk high Vs USD at $0.7661
Bitcoin was flat at $57,966
Bitcoin was flat at $57,966.
Have a healthy day, Keep the Faith!