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| Commodity News |
| HeadLine : |
Dollar surrenders to euro and yen as rate supremacy ends |
| Date : |
Mar 6 2020 |
Mounting fears over the fallout from the coronavirus has driven a truly tectonic shift in expectations for U.S. rates as markets wager the Federal Reserve will have to cut rates by 50 basis points for a second time this month. The resulting collapse in Treasury yields has been the death of one of the most popular carry trades globally - borrowing at negative rates in the euro and yen to buy U.S. assets. There were lots of other miserable milestones, with the dollar sinking to a six-month low on the yen at 105.96 having shed 1.2% overnight. The next bear targets were 105.72 and 104.44, lows from August and September last year. It also sank to a two-year trough against the Swiss franc at 0.9443 francs , and was down 2% for the week so far. The yen, euro and Swiss franc are backed by countries that run strong external surpluses, while Japan has the added advantage of being the world's largest creditor nation. Those safe-haven attributes had grown in importance as U.S. 10-year yields
(US10YT=RR) tumbled to just 0.91%, a drop of 66 basis points in just 11 sessions. Fed fund futures were also pricing in more than 80 basis points of further easing by year end.
Source : Investing
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