Dollar Eases From Highs as U.S. Bond Yields Retreat

Investing.com – The dollar retreated from a fresh five-month high against a basket of major currencies as a rout of the euro eased, prompting traders to take profits on the greenback despite concerns about proposals laid out by a future Italian coalition government.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.09% to 93.48. The greenback earlier in the session had hit a high of 93.74, the highest in five months.

EUR/USD fell 0.14% $1.1779 pressured by a drop in Italy's 10-year bond yield as the Five-Star Movement and League reached a coalition agreement to govern the Italy, laying out proposals that may hurt public finances. The coalition agreement, however, did not include any proposal to ask the European Central Bank to cancel Italian debt.

The retreat in the U.S. bond yields also prompted traders to unwind some of their bullish bets on the dollar and take profit as the 10-year yield turned negative despite some analysts suggesting the uptick in U.S. treasury yields would continue.

“The fundamental driver of a rising US yield advantage relative to Bunds, coupled with concerns about government policy in Italy, look likely to remain in play,” Action Economics said.

GBP/USD fell 0.23% to $1.3484, while USD/JPY fell 0.10% Y110.66.

USD/CAD rose 0.36% to C$1.2891 as Canada inflation fell short of expectations, denting expectations the Bank of Canada would hike rates sooner rather than letter.

Related Articles

Forex- U.S. Dollar Rallies To Five-Month High

Morgan Stanley Says Nafta Risks Still Lie Mostly in Mexico Peso

Argentine peso stabilizes after central bank draws the line at 25 per dollar