Dollar roller coaster heads up
By Arnaud Masset
The US dollar surged this morning, up 0.45% against the Euro, 0.20% against the pound sterling, 0.50% against the Aussie and 0.70% against the Kiwi. A climb in US yields definitely helped. Monetary-policy-sensitive 2-year treasuries bounced back to 1.5635% while the 10-year yield edged up to 2.3680%.
We remain bullish on the dollar; however, short-term volatility will continue. So, dollar investors should keep some chips on the side. The greenback has held ground thanks to optimism about a Trump tax reform. This is not a done deal, but signs are that he will keep this campaign promise. However, worries cloud the horizon: although the US Federal Reserve will likely hike interest rates in December, next year might be more dovish than anticipated. There might be a new Fed Chairperson – a decision is expected soon – who could change course.