Dollar Firms Ahead Of Powell Speech; US Benchmark Treasury Yields Spike

Published on Oct 19, 2023 11:39

The dollar index extended overnight gains and stays well supported on Thursday, driven by a sharp spike in US benchmark treasury yields. The benchmark 10-year US yield ascended back to 16-year highs above 4.9% driving the dollar higher. The dollar index that measures the greenback against a basket of currencies is seen quoting at 106.44 ahead of much awaited Federal Powell`s speech later in the global day for further clarity on monetary policy path. Recent data from the US suggest improvement in US economy that reinstates the possibility of holding interest rates higher for prolonged period of time. Meanwhile, Governor Christopher Waller on Wednesday indicated that the Fed could wait, watch and see how the economy evolves before making definitive moves on the path of the policy rate. If the real economy continues showing underlying strength and inflation appears to stabilize or reaccelerate, more policy tightening is likely needed despite the recent run up in longer term rates, he stated. Meanwhile, among the basket currencies, EURUSD is marginally down at $1.0558 whereas GBPUSD lost ground and is down 0.2% at a two week low of $1.2126.