"The dollar index was firm on Tuesday as investors monitored developments around the US government shutdown. Hopes of a breakthrough emerged after National Economic Council Director Kevin Hassett suggested the shutdown could end this week. At the same time, easing concerns over trade tensions with China could lift the currency. Receding concerns over the US banking sector could also limit the pressure on the dollar."
"In the bond market, US yields extended their decline, with the 10-year slipping back below 4% and the 2-year hovering near 3.45%. Rising expectations of Fed easing, with markets fully pricing in a 25 bps cut next week and later this year and the next, could continue to drive yields down. Looking forward, attention now turns to Friday's CPI report, which is expected to show stable inflation."
Dollar index remained firm as investors watched the US government shutdown, with National Economic Council Director Kevin Hassett suggesting it could end this week. Easing trade tensions with China and receding US banking-sector concerns reduced downward pressure on the currency. US Treasury yields fell further, the 10-year slipping below 4% and the 2-year near 3.45%. Markets priced in a 25 bp Fed cut next week and additional easing later this year and next, pushing yields down. Focus shifts to Friday's CPI, where a softer print would bolster easing expectations while an upside surprise could spike yields and the dollar.
Read at London Business News | Londonlovesbusiness.com
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