The dollar does not plan to leave the recently occupied 2-week maximum in the near future, support for the currency provides the status of a safe haven amid growing concerns that trade tensions between the US and China may escalate after Washington's statements about Huawei. The dollar has established itself as a safe haven, it is in high demand when stocks fall and market volatility increases. In addition, a rebound in the yield of US Treasury bonds is another factor supporting the dollar. Given that the Fed did not give clear hints of a rate cut this year, the recovery in yield may continue for some time.
Recall, Fed Chairman Jerome Powell said that it is too early to talk about the impact of trade conflicts on monetary policy. The yield on 10-year Treasury bonds rose to an eight-day high of 2.428%, while a few days ago the yield fell to 2.354%, its lowest level since March 28. Currently, among industrialized countries, only Italy has a higher rate than the United States. In such conditions, traders have almost no other choice but to turn to the dollar.
The euro fell to $1.1165 and is likely to feel downward pressure until the end of the European parliamentary elections scheduled for May 23-26. The Australian dollar fell by 0.25% to $0.6891, its growth was stopped by a statement from the head of the Reserve Bank of Australia, Philip Lowe, that the Central Bank will consider reducing interest rates at its policy meeting in June. The decline will be the first since August 2016. The Australian added almost 0.6% a day earlier after the unexpected victory of the country's conservative government in elections. Investors evaluated the economic policies of the opposition Labor Party as less favorable to business, and the unexpected defeat of the Labor Party led to a rally in Australian markets.
The material has been provided by InstaForex Company - www.instaforex.com