TNote yields jumped and the US Dollar Index (DXY) rose to multi-week highs above 99.70. This steep climb happened amid a rapidly shifting economic landscape and with global trade debate continuing to brew. The increase in US Treasury yields along the entire curve gave a strong impetus for dollar strength. This increase was integral to making the proposal more robust and valuable. Market participants closely scrutinized the US-China trade agreement’s potential benefits. Consequently, we observed the more exotic currency pairs responding fiercely against the dollar’s bullish trend.
On Wednesday, WTI crude oil prices edged up. They neared the $61.00 per barrel ceiling. That recent increase followed a modest rebound from lows seen earlier this year. This speaks to the continual volatility in the energy sector as market actors assess larger economic signals.
EUR/USD currency pair slid to fresh two-week lows, losing ground under-passing the key 1.1550 mark. The more robust performance of the US dollar continued to weigh heavily on the market. This story somewhat buried another important interest rate decision by the European Central Bank (ECB). Market analysts reported that traders seemed to have no interest in what the ECB had announced, and rather had their eyes on the dollar rising up.
At the same time, gold prices were able to claw back some ground after four straight days of losses. The precious metal remained under the important $4,000 per troy ounce level. This speaks to continued market predilections and changing investor appetites.
The British pound (GBP) came under heavy fire as GBP/USD crumbled to fresh six-week lows, approaching the 1.3120 region. Traders are concerned about the pound’s long-term stability following the plummet. This drop came at the same time as the US dollar recently spiking and increasing speculation of upcoming rate cuts from the Bank of England (BoE).
On top of that, the Australian dollar (AUD) got clobbered while AUD/USD hovered near weekly lows around 0.6530. A powerful US dollar is exerting deflationary pressure on the currency. Weaker economic indicators from Australia are furthering the trend.