As the Fed’s interest rate resolution is about to be announced, the ICE-traded dollar index has fallen to a nearly three-month low, due to short-covering of the euro by futures accounts; the euro futures trading volume is the highest since March; It rose against commodity currencies and fell against safe-haven currencies.
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The US dollar index fell 0.33% to 96.38; the US data was weaker than expected, and the number of job vacancies fell to the lowest since 2014; wholesale sales fell by 16.9% in April; Japanese investors also sold the US dollar because they expected the Fed to take measures to flatten U.S. debt Yield curve. The 10-year U.S. Treasury yield fell by 4.7 basis points to 0.829%; buyers have Asian accounts, and hedging demand may be due to low costs.
Investors are paying attention to the Fed’s statement on Wednesday after the two-day meeting. The market is increasingly speculating that the Fed may adopt policies or other measures that set targets for the yield of public debt to anchor long-term debt yields.
Wells Fargo referred to Fed Chairman Powell in a research report, saying “Although we see some recent kinetic energy of foreign exchange against the US dollar, we are not prepared to buy until we hear from Powell and his friends. USD.” If the Fed continues to say no to negative interest rates and seriously avoids opening the door for yield curve control, we may see the USD continue to rebound.
The euro rose about 0.41% to 1.1340 against the dollar; partly supported by the momentum account and the options market; the German finance minister said that the EU countries may reach a consensus on the 750 billion euro recovery plan in the short term. According to DTCC data, major option transactions include 2.130 million Euros with 1.1500 options expiring on June 26.
Schnabel, the European Central Bank’s executive committee, said that lower interest rates are still the future option. The central bank believes asset purchases are a more effective tool and said the central bank is considering the pros and cons of price level targets; saying that quantitative easing has slightly reduced wealth inequality.
USD/JPY fell 0.62% to 107.76, earlier hitting a one-week low of 107.63 due to the decline in US Treasury yields; buying near the closing price of 107.76 on March 30 slowed the decline, and the euro rebounded against the yen; 1 The monthly risk reversal rose to 1.5050, supporting a bullish yen. The dollar fell 0.71% against the Swiss franc to 0.9508, and earlier fell to 0.9483, the lowest since mid-March; the euro fell against the Swiss franc due to weakening of external European debt.
Commodity currencies have given up gains against the dollar. The dollar rose 0.26% to 1.3417 against the Canadian dollar; the Australian dollar fell 0.85% to 0.6961 at the end of the day; during the Asian trading hours, the Australian dollar rose to an 11-month high of 0.7041. The New Zealand dollar fell 0.70% against the US dollar to 0.6514, retreating from the four-and-a-half-month high previously reached.