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On Wednesday, the evergreen buck slumped versus the common currency and the UK pound because a dive in American Treasury gains diminished its attractiveness in the face of hopes for dovish news on interest rates from the major US bank.
Bond gains were pressured by economic data, which have clung to the weak side for the last time. For the last month the 10-year benchmark Treasury yield has gone down from 2.80% to 2.64% against the backdrop of uncertainty over how far the major US financial institution can afford tightening monetary policy.
Such uncertainty definitely makes Wednesday special, as traders are waiting for the publication of the minutes from the recent Fed gathering, where the major American financial institution opted for a more neutral as well as data-dependent stance, giving up its previous guidance about the probability of further interest rate lifts.
Investors are going to look for clues about how fast and how far the major US bank is about to have its balance sheet reduced. The Cleveland Fed President, Loretta Mester told that she appreciated the idea of ending the balance sheet wind-down in 2019 because such an outcome could potentially leave a considerable amount of crisis-era liquidity in the system, neutralizing any leap in market interest rates. Moreover, she added that official interest rates would most probably ascend rather than tumble.
Estimating the purchasing potential of the greenback versus a number of its main peers the USD index hit 96.333, slumping by 0.5% from its overnight maximum. The common currency was close to a one-week maximum at $1.1351 because German producer price inflation data for January turned out to be higher than anticipated.
Overnight the Chinese Yuan managed to ascend by about 0.5% versus the evergreen buck hitting 6.7227.
Reportedly, the ECB is analyzing the possibility of the change of the current inflation target of "below but close to 2%". It weakened the EUR
What is important today?
USD/SGD rises as the indicators disappoint the market.
In July, Britain's inflation rate rallied for the first time in 2018, thus leaving many UK households feeling quite squeezed by prices, soaring at nearly the same tempo as their wages…
On Friday, the evergreen buck rallied versus its counterparts after data disclosed that the American economy generated more jobs than anticipated In October, thus backing the Fed’s case to proceed with gradual rate lifts…
On Tuesday, gold rallied because uncertainty over the latest developments in Britain’s departure from the EU backed safe haven demand and traders looked ahead for American inflation data to underpin the Fed’s pledge to remain on hold…
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