The week is set to end with the US dollar a bit higher against most currencies and the DXY Index just below fresh year-to-date highs. The dollar’s latest gains coincide with yet another week of rising long-term bond yields in the US and elsewhere. But short-term bond yields have generally fallen over this period, consistent with the softening inflation data out of the euro-zone and US. What’s more, the gap between short-term yields in the US relative to elsewhere seem to be a fading tailwind for the greenback. For the dollar’s “stronger for longer” run to continue, we think the baton will need to pass from yield gaps to safe-haven demand amid deteriorating risk sentiment.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services