It is fair to say that the evolution of the dollar price has been poor. After having spent the last 10 weeks discussing the break in the US Treasury Treasury Bones of the US Treasury As the thesis of ‘Sell America’ was strengthened, investors noticed that the dollar was too willing to return to traditional correlations on Wednesday, since the soft CPI sent the US Treasury bonds of the US Treasury. The DXY ended the day with a fall of approximately 0.5% – a typical reaction to a bullish flattening of the US yield curve under the opinion that the Fed had more margin to cut. For reference, the soft data of the CPI added around 9-10 basic points to the expected relaxation cycle of the Fed by 2025, says Chris Turner, FX analyst of ING.
The DXY is quite close to April minimum at 97.90/98.00
“The dollar has also failed to enjoy a rebound with the news of progress in commercial negotiations between the US and China. That may be because the details of the agreement have been very vague, but yesterday the president of the USA, Trump, also said that the Department of Commerce would send letters next week dictating commercial agreements of ‘Take or leave it at approximately 20 countries that are currently involved in negotiations. The risk of abrupt jump in the tariffs on July 9 on the table – seen again as a negative for the dollar. “
“There are probably only two factors that are supporting the dollar in the short term. The first is that the dollar is very stretched compared to rates differential East as speculation grows on a possible Israeli attack on Iran’s nuclear facilities.
“The DXY is quite close to the April minimum in 97.90/98.00. We prefer to see that as the bottom of a negotiation range. But the evolution of the price of the dollar has been poor and perhaps we are seeing the lagging impact of decisions of re-assignment of global portfolios, such as direct sales of US assets or increases in the coverage ratios. Certainly, lower rates in the US. In the short term they facilitate the decision to increase coverage ratios in US assets. “
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
