The US Dollar Index lost momentum at the end of last week and closed the week almost flat. It started this week on a positive note and gained for two consecutive trading days. On Tuesday, US Dollar Index closed at the highest levels in a month.
The US dollar regained strength this week. Comments from several Fed officials this week increased the chances of gradual interest rate hikes in 2017. Weaker-than-expected jobs data raised concerns in the market about the economy’s stability in the coming months. According to New York Fed President and FOMC member William Dudley, recent weakness in the job market is temporary. The US labor market is expected to improve in the coming months—one of the factors that helped the US dollar move up this week.
In the early hours on Wednesday, the US Dollar Index is slightly weaker. At 6:30 AM EST on June 21, the US Dollar Index was trading at 97.66—a fall of 0.11%.
US Treasury yields
US Treasury yields started this week on a stronger note but lost strength as the week progressed amid concerns about sluggish inflation numbers. US Treasury yields regained confidence in the market regarding gradual interest rate hikes. A string of comments from Fed officials improved the sentiment in near-term yields such as the two-year Treasury yield.
At 6:40 AM EST on June 21:
- The ten-year Treasury yield was trading at 2.150 – a fall of ~0.16%
- The 30-year Treasury yield was trading at 2.728 – a fall of ~0.29%
- The five-year Treasury yield was trading at 1.757 – a fall of ~0.09%
- The two-year Treasury yield was trading at 1.348 – unchanged
The iShares 20+ Year Treasury Bond ETF (TLT) rose 0.9%. The ProShares UltraPro Short 20+ Year Treasury ETF (TTT) and the ProShares UltraShort 20+ Year Treasury ETF (TBT) fell 2.1% and 1.8%, respectively, on June 20. In the next part, we’ll discuss how commodities performed in the early hours on June 21.