September 24, 2021

All USD Profits Disappear Just Like That! What is this case?

 The U.S. dollar traded lower as recovering risky sentiment in global financial markets wiped out its gains from the Federal Reserve’s (Fed) policy announcement signaling a reduction in bond purchases would begin soon.

Risky sentiment improved following news that said Evergrande, China’s second -largest real estate firm was likely to be restructured to avoid failure.

The People’s Bank of China (PBOC) has also injected liquidity into its financial system when Evergrande announced it would make interest payments through ‘onshore bonds’.

This has prompted gains in global oil and equity markets, with 10 -year US treasury bond yields rising to their highest level since July at 1.43%.

The dollar index, on the other hand, failed to keep up with rising bond yields by falling to a one -week low against a basket of major currencies at 93.08.

Disappointment grew after readings of US unemployment claims data showed an increase last week, shaking investors' views to see a recovery in the strong employment sector.

Despite having been shown by gloomy economic data readings and unchanged Bank of England (BOE) policy decisions, the pound remained bullish following the depreciation of the US dollar.

Euro trading also took advantage of the recovery in this sentiment to rise above 1.1700 against the USD after sinking to a one -month low following the Fed decision.

Commodity currencies also gained gains by trading higher against the greenback dollar following positive sentiment in the market.