The Dollar has been the star performer in the past 24 hours, appreciating about 0.8% to a three-month high against a basket of currencies of the United States’ main trading partners. The Dollar is getting support from higher US yields, with the rise in crude oil prices above $75/barrel pushing 10-year US treasuries within touching distance of the 3% level. Markets have been forced to pare back Dollar shorts and further build up short Treasury positions.
The Dollar is also benefiting from Sterling’s climbdown following last week’s stream of soft UK macro data, Bank of Governor Carney’s border-line dovish speech and the government’s successive defeats in the House of Lords over Brexit legislation. Moreover, the Euro has been unable to build on gains made earlier this year, seemingly hampered by the decline in Eurozone business confidence and market expectations that the ECB will be in no rush to tighten monetary policy.
