US Dollar Gets a Boost from Fed Rate Speculation and Treasury Yields
As you might know, traders have pretty much written off the idea of the Federal Reserve cutting interest rates anytime soon. Just a few short days ago, people were still fairly convinced that a rate cut was on the cards. Now
Most seem to think we won’t even see one until at the very least Summer. Meanwhile, US 10-year Treasury yields have been quietly creeping up to around 4.06% over the past few sessions, partly due to fears of rising inflation.
The Fed is no longer looking to cut rates anytime soon, which is helping to give the US dollar a bit of a boost as people look for safe places to stash their cash.
Middle East Tensions Keep Safe-Haven Demand High
Another factor pushing the US dollar higher is that folks in the Middle East are getting a bit spooked by what’s happening in the region. I mean, the conflict there doesn’t seem to be getting any better – if anything, it’s going the other way. And that’s naturally sending a bit of a chill down investors’ spines, so they’re looking for somewhere to put their money that they feel a bit safer with. The US dollar is looking pretty appealing at the moment.
The fact that US President Donald Trump is essentially warning that the conflict could make dealing with Iran’s government even harder than it already is isn’t helping to calm things down. Nor is the news that Israel has launched another attack in southern Lebanon. On the ground, fighting doesn’t seem to be letting up either.
So as you’d probably expect, the whole region feels pretty unstable at the moment. That means people are being careful with their cash, which in turn is keeping demand for the US dollar pretty strong.
