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  • Writer's pictureanalysiswatch

Title: Dollar falls as U.S. yield rally stops for breath

Apr 14, 2022 01:41AM ET

By: AnalysisWatch

The dollar lost ground against most major currencies on Thursday, falling from a two-year high reached overnight as US yields halted their uptrend after US data released earlier in the week showed lower inflation than some analysts feared.

Even the weakened yen recovered somewhat from its 20-year low reached overnight, although analysts had expected the yen to remain weak.

Otherwise, investors were awaiting the outcome of the European Central Bank's meeting later in the day to see if it would move as aggressively as some of its global peers after a series of rate hikes in recent days.

The euro rose 0.2% to $1.0911 ahead of Wednesday's session and sterling added 0.1% to a one-week high of $1.3141, with both currencies extending larger gains from the previous session.

The dollar index, which measures the greenback against six other currencies, fell 0.17% to 99.670 from Wednesday's high of 100.52, the highest since May 2020.

The yield on the benchmark 10-year Treasury note was at 2.6693%. It rose steadily earlier this month on expectations of more aggressive tightening by the Federal Reserve to fight inflation, hitting a high of 2.836% on Tuesday ahead of the release of U.S. inflation data.

Those yields were high but not as bad as some had feared, giving yields a breather, observers said.

The two-year yield was also lower at 2.3218%.

The optimistic mood in the world ahead of the ECB meeting was confirmed by other central banks. Earlier in the day, the Bank of Korea surprised markets by raising rates, and the Monetary Authority of Singapore also tightened its policy.

On Wednesday, the Bank of Canada and the Reserve Bank of New Zealand each raised interest rates by 50 basis points, the largest increase in about 20 years.

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