Dollar Retreats from Two Decades High as U.S. Yields Rally

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The dollar has eased from a two-decade high against major currencies on Thursday, following an easing in Treasury yields. On the same note, U.S equity rallied as investors continued to assess the economic outlook.

The euro retreated from a two-decade low against the greenback, while the commodity-backed Australian dollar skyrocketed following a rebound in crude oil and copper prices.

Meanwhile, the dollar index, which measures the greenback against six other currencies, saw a decline of 0.22% and now trades at 106.82. This is a significant pull back from the overnight peak of 107.22, a new high which hasn’t been recorded since late 2002.

Elsewhere, the two-year Treasury, which recovered from near one month low to as highs as 3.006% on Wednesday, has retreated to 2.9629%.

The euro, which has been on the back foot in the last couple of weeks, rose slightly by 0.25% and is now trading at $1.01845. However, it would be recalled that the euro went as low as $1.01615 during Wednesday’s trading session, its lowest level since the end of 2002.

After registering a two-year low of $0.67615, the Aussie has recovered slightly by 0.55% and is now trading at $0.6820. While Brent crude exchanged for $101, copper rallied to 3% on the day.

Risk sentiments across the Asian market look pretty reasonable, forcing U.S yields to retreat sharply and the dollar to pull back from its two-decade highs.

Commodities aren’t in bad shape this week compared to last week. This is a positive sign for commodities and pro-cyclical currencies.

With the Federal reserves not going back on their aggressive tightening stance, investors will be weighing the risks of a U.S. recession. Minutes from June’s meeting released on Wednesday showed that policymakers tightened by 75 basis points, its highest since 1994. This seems to confirm investors’ fears that the Fed may be unable to control worsening inflation.

Investors will also be looking out for the jobs report for June this Friday. There are speculations that at least 268,000 jobs will be added during this month’s non-farm payrolls.

Nitish Vaibhav
Nitish Vaibhav
Nitish Vaibhav is the Founder of the The Trading Bay. A computer science engineer turned an Entrepreneur 5 years ago. He has been in trading since 4 years in Forex and Crypto using his price action strategies. Involved in Content Creation full time for 3 years, Nitish is top rated writer on many content writing websites. He is also a YouTuber in India making videos about Crypto and Forex.

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