If you’re familiar with the US dollar Index, you might have noticed it has moved in a repetitive pattern for the past few years.
You need to treat every six months as a cycle, at the end of this cycle (June, December), the Fed will generally raise interest rates.
Here’s a look at how this pattern may look:
For the past eight weeks, the USD has held below 95 levels. Similarly, the US 10-year bond returns cannot break the 3% ceiling. it is it likely that they will fall?
At present, there are two reasons why this may occur:
If the US 10-Year yield does breach upwards of 3%, it may harm all US companies and its domestic economy. Therefore, keeping the return around 3%, but not breaking it, seems a better option.
Ultimately, the manipulation of monetary policies has both positive and negative effects and deciding who may win a trade war between the US and China is too hard to call. We will wait and see.
This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.
Lanson Chen
GO Markets Analyst
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