The dollar hit a two-decade high on Monday as rising US Treasury yields prompted hedge funds to raise their bullish bets, while the Chinese yuan weakened below 6.77 per cent. dollar after poor trade data.
The latest leg of the dollar’s rally, which began after the Federal Reserve raised interest rates by 50 basis points last week, has hit currencies that had previously been immune to the greenback’s rise, such as the Australian dollar, the yuan and even cryptocurrencies.
Although the market estimates that the current tightening cycle in the United States will take interest rates to around 3.5% by mid-2023, the speed of the Fed’s rate hike is much faster than that of its peers in the Bank of England and the European Central Bank.
Money markets expect the US to raise interest rates by a further 200 basis points in the remainder of the year, taking benchmark rates to almost 3%, while the ECB’s planned hikes of 92 basis points will only take its toll. territory reference deposit rate.
Treasury yields extended gains for the third straight session, with benchmark 10-year yields topping 3%, hitting 3-1/2-year highs.
Although the market estimates that the current adjustment cycle in the United States will take interest rates to around 3.5% in mid-2023, the speed of the Fed’s rate hike is much higher than that of its peers in the Bank of England and the European Central Bank.
Money markets expect the US to raise interest rates by a further 200 basis points in the remainder of the year, taking benchmark rates to almost 3%, while the ECB’s planned hikes of 92 basis points will only take its toll. benchmark deposit rate to positive territory.
Source: Ambito
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