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US Dollar Index Increased despite Weak Bond Yields

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US Dollar Index

After gaining for two consecutive trading weeks, the US Dollar Index started this week on a stronger note by surging on Monday. Carrying forward the strength, the US Dollar Index opened stronger on May 29. The index was trading with strength at the highest levels traded since November 2017 in the early hours.

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Market sentiment

The US Dollar Index lost strength in the middle of last week amid the dovish tone in the Fed’s meeting minutes. The index regained strength as the week progressed. Maintaining the strength, the US dollar is trading higher this week despite weakness in bond yields. The decreased global risk appetite increased the demand for safe-haven assets. Political uncertainty in Italy amid a call for new elections by the anti-establishment Five Star movement and the far-right League party increased the global risk appetite on Tuesday. On the other hand, the market is looking forward to the release of May’s US CB Consumer Confidence data that are scheduled to be released at 10:00 AM EST today.

At 5:35 AM EST on May 29, the US Dollar Index was trading at 94.87—a gain of 0.73%.

US Treasury yields

After a sharp decline last week, US Treasury yields declined on Monday and traded with weakness in the early hours on May 29. Increased concerns about political uncertainty in Italy pushed the bond prices higher and acted against the Treasury yields. Below are the movements in Treasury yields as of 5:45 AM EST on May 29.

  • The ten-year Treasury yield was trading at 2.853—a fall of ~2.9%.
  • The 30-year Treasury yield was trading at 3.032—a fall of ~2.1%.
  • The five-year Treasury yield was trading at 2.676—a fall of ~3.3%.
  • The two-year Treasury yield was trading at 2.420—a fall of ~2.6%.

The iShares 20+ Year Treasury Bond (TLT) gained 0.62%, while the ProShares UltraShort 20+ Year Treasury (TBT) and the ProShares UltraPro Short 20+ Year Treasury (TTT) declined 1.3% and 2.1%, respectively, on Monday.

Next, we’ll discuss how commodities performed in the early hours on May 29.

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