31 Jan 2022
Dollar Plummets amid Flattening U.S. Yield Curve
The Index Today
The U.S. dollar fell on Monday as hawkish comments made by Atlanta Fed President Raphael Bostic flattened the U.S. yield curve for the most in three months.
Additional interest rate hikes to counter rising inflation are seen as obstructive to the growth of markets, marked by the drop in ten-year U.S. Treasury yields by over 59bps since November. According to strategists at Mizhuo, the U.S. Federal Reserve’s continued tightening of monetary policy "reflects the growing belief that the Fed is behind the curve in fighting upside inflation risks and will need to deliver more front-loaded tightening."
The dollar dropped by 0.2% to 97.02, while the Australian dollar rose by over 0.5% at $0.7043 ahead of its central bank policy meeting on Tuesday. The Bank of England (BOE) is also set to meet this week on Thursday with experts anticipating another interest rate hike to combat pandemic-induced inflation which soared to its highest in the country in thirty years.