US Dollar Corrected Following The Decline in Bond Yields

The yield on the 10Y US Treasury bond is now at the level of 2,684 percent, even though a few days ago it was close to the 2,800 percent range.

The US dollar index (DXY) fell below the 100.00 threshold following a pullback in US Treasury bond yields. The greenback is observed to be weakening, especially against sterling and the euro. When this news was written in the last half of Thursday's (14/April) Asian session, USD/JPY also put the brakes on a bullish rally for a while below the 126.00 threshold.

DXY Daily chart via TradingView

The 10Y US Treasury bond yield is now at the level of 2,684%, even though a few days ago it was close to the 2,800% range. This dynamic then reduced the US dollar's bullish pressure against various other major currencies.

"At the start of the week, I said everything follows a sustained rise in US yields, equities are down, the dollar is surging; and now because of what happened to US Treasuries (anyway), things are turning around," said Ray Atrrill, head of global FX strategy at the National Bank of Australia.

The pound sterling posted its sharpest rebound versus the US dollar yesterday. The GBP/USD exchange rate jumped from the 1.2970s range to over 1.3100, after the release of UK inflation data which showed figures much higher than consensus estimates. The Bank of England (BoE) is likely to raise interest rates again next month, although some analysts are starting to worry about the impact successive rate hikes will have on household finances and Britain's economic growth.

Also Read : The Kiwi Dollar Drops as a Dovish Rate Hike

The USD/CAD rate has also slumped since the New York session thanks to the Bank of Canada's (BOC) benchmark interest rate hike announcement. The BoC raised interest rates by 50 basis points from 0.5 percent to 1.0 percent -according to market expectations- as well as sending a signal for a more aggressive "rate hike" going forward.

Also Read : Chinese Consumer Inflation Rising, PPI Still High

Market participants today await the announcement of the results of the European Central Bank (ECB) meeting to check whether they will be as hawkish as their counterparts in other major central banks. The ECB faces a quite unique risk of stagflation, because the inflation rate has skyrocketed and the economy has the potential to slow down due to the effects of the Russia-Ukraine war.