US Treasury yields fall and the dollar weakens despite US government intervention to stabilize the banking system and prevent deposit outflows.
he EUR rose today and traded above $1.07. 1 month maximum That’s because the market is discounting that the Federal Reserve (Fed) will only raise interest rates by a quarter of a percentage point next week, or not at all. This action, while worth identifying, remains uncertain, especially after the collapse of the United States. Silicon Valley Bank (SVB).
The euro traded at $1.0717 compared to $1.0695 in the last hours of European negotiations on the forex market the day before.
The European Central Bank (ECB) Euro reference change at $1.0706.
“The Fed’s policy has undergone a major rethink, weighing heavily on the dollar,” said analysts at Monex Europe after the failure of Silicon Valley Bank (SVB), which specializes in lending to startups.
The market is currently The Federal Reserve will at most raise interest rates by a quarter of a percentage point next week, or not at all.
Traders have effectively ruled out the option of the Fed raising interest rates by 50 basis points, tempering expectations for this bullish cycle.
For this reason, despite the US government’s intervention to stabilize the banking system and prevent deposit leakage, US Treasury yields fall and the dollar falls.
Despite contagion fears, such as those reflected in the stock market plunge of European banks after the collapse of Lehman Brothers in 2008, analysts expect the ECB to raise interest rates by half a percentage point on Thursday, up to 3%. I predict. .5% is what has been pointed out before.
After that, the ECB’s deposit facility that rewards overnight deposits remains at 3%.
“We expect an upward revision to the core inflation profile to support our outlook for another 50 basis points of gains in May. Recent concerns about financial stability could lead to caution levels at the ECB’s Governing Council. Added Monex Europe.
The single currency traded between $1.0651 and $1.0737.