Ten-year U.S. Treasury yield rebounds Prospect of a U.S. interest rate cut down by 50 basis points
The U.S. dollar rose in the European market on Monday against a basket of major and minor currencies, extending gains for the second consecutive day and moving higher towards a multi-week high, amid the current rebound in the ten-year U.S. Treasury yield, following more aggressive comments from a Federal Reserve official.
Those comments reduced the odds of a US interest rate cut by about 50 basis points later this month, pending the release of key US inflation data for August over the coming days.
Price overview
US Dollar Index Price Today: The dollar index rose by 0.50% to (101.69) points, from the opening level of today’s trading at (101.19) points, and recorded a low of (101.14).
The index ended Friday’s trading up 0.15%, the first gain in the last three days, thanks to comments from Federal Reserve officials.
US Bond Yield
The yield on the 10-year US Treasury bond rose on Monday by 1.4 percentage points, consolidating above a 15-month low of 3.650%, on track for the first gain in the last five sessions, which favors the rise in US dollar levels.
Aggressive comments
New York Federal Reserve President John Williams said on Friday that it was time to cut interest rates, but he was not very enthusiastic about starting the cycle with a 50 basis point cut in significant.
With the economy now stabilizing and inflation trending to 2%, it is now appropriate to reduce the degree of constraint in the policy stance by reducing the target range for the federal funds rate, Williams said.
“The monetary policy stance can be moved to a more neutral framework over time depending on the evolution of data, forecasts, and risks to achieving our goals.
American interest
Following the above comments and according to CME Group’s FeedWatch: US interest rate cut probability pricing fell by 50 basis points at the September meeting from 69% to 31%, and cut rate pricing increased by 25 basis points from 31% to 69%.
In order to reprice those possibilities, investors await later this week the release of headline US inflation data for August.
Forecast for the performance of the US dollar
Here at FX News Today, we predict: the US dollar will continue to move in positive territory against a basket of global currencies, and the currency could lose most of its gains if the US inflation data comes cooler than expected, which again boosts the prospects of a rate cut of around 50 basis points.
Read also:Dollar reaches this level in Egypt after increasing remittances from workers abroad
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