Kevin Buckland
TOKYO (Reuters) – Bond market volatility spiked as investors scrutinized U.S. economic data, Federal Reserve comments and corporate earnings for clues on where interest rates are headed. , the dollar stabilized on Wednesday.
The Dollar Index, which measures the value of the US dollar against six major currencies, rose 0.11% to 101.83 in Asian trading. It fell 0.36% on Tuesday, reversing a 0.54% rise in the previous session. On Friday, the index fell to his one-year low of 100.78.
US 2-year Treasury yields, which are very sensitive to Fed expectations, hit an almost one-month high overnight at 4.231% and remained high in Tokyo trading on Wednesday.
St. Louis Fed President James Bullard said in an interview with Reuters that the market consensus leans toward another 75 basis points of rate hikes next month, followed by a rate cut later this year. said there is.
In contrast, Atlanta Fed President Rafael Bostic said in an interview with CNBC that he expects another quarter of a percentage point hike followed by a pause.
“Markets are mostly content with a 25 basis point rate hike at the May meeting,” said Ray Attrill, head of FX strategists for U.S. bond markets. It’s been ups and downs,” he said. National Australia Bank.
“It is bond market volatility that is driving the dollar higher, not the other way around,” he said.
Tuesday’s fall in the dollar also helped as demand for safety fell after Atrill called China’s economic growth data for the day a ‘blockbuster’, pushing the risk-sensitive Australian currency higher. .
Australia fell 0.06% to $0.67245 on Wednesday after gaining 0.41% in the previous session.
The euro was stable at $1.09725 after Tuesday’s gain of 0.42%. Sterling fell 0.09% to $1.2413 following a 0.38% gain on the previous day.
The dollar rose 0.17% to 134.31 yen, recovering from Tuesday’s 0.29% decline.
“The main driving force that has underpinned the U.S. dollar as a whole – the weakening global economy – is fading, if not neutralizing,” analysts at HSBC wrote in a note to clients.
“That drop is likely to be bigger than some think.”
(Reporting by Kevin Buckland, Editing by Jacqueline Wong)
