Dollar Gains Modestly as Market Awaits Central Bank Meetings
The US dollar saw a modest gain of 0.3% on Monday, following a speech by Fed Chair Warsh at Jackson Hole last Friday that was seen as hawkish.
However, this gain has been tempered by the fact that front-end yields across G10 countries have also risen, partly due to increased energy prices following the escalation in hostilities between the US and Iran.
The 2-year UST bond yield jumped 11bps on Friday, but the more subdued dollar reaction can be attributed to several factors. Firstly, every G10 central bank is meeting this month, with some expected to hike interest rates, while others may surprise by raising rates or remaining on hold.
This has led to a cautious tone from most central bankers, which could be discouraging appetite for buying the US dollar at present.