Dollar Hovering Near 2-Week Highs, Sterling Edges Higher

Monday,   19-Aug-2019   12:54 PM (IST)

The U.S. dollar was hovering near two-week highs against a currency basket on Monday as U.S. Treasury yields bounced back from recent lows amid hopes that major economies will seek to prop up slowing growth with fresh stimulus. The U.S. dollar index, against a basket of six major currencies was at 98.05 by 03:01 AM ET (07:01 GMT), not far from the two-week high of 98.20 reached on Friday. The 10-year U.S. Treasury yield stood at 1.57%, having pulled away from a three-year trough of 1.47% marked last week in the wake of global slowdown fears. Falling yields last week caused the two-year/10-year Treasury curve to invert for the first since 2007, a phenomenon widely regarded as a recession signal that puts the Federal Reserve interest rate deliberations into focus. Powell will deliver a speech on Friday at an annual meeting of central bankers in Jackson Hole, Wyoming. Powell said after the Fed lowered rates in July that the easing was not the start of a series of cuts. But market expectations for the Fed to cut rates by another 25 basis points at the next policy meeting in September have increased. The euro was steady at 1.1092 while the British pound edged up 0.15% to 1.2166. The dollar was little changed against the yen at 106.37. The Chinese yuan was slightly lower after U.S. President Donald Trump said he was not ready yet to make a trade with China. Traders were also cautious ahead of the debut of China's new benchmark lending rate on Tuesday, which was announced at the weekend. The People’s Bank of China on Saturday unveiled interest rate reforms to help lower borrowing costs for companies and support slowing growth, which has been hit by the trade war with the U.S.