The U.S. dollar traded near two-week lows on Wednesday after U.S. bond yields lowered from recent highs. Investors are waiting for the Federal Reserve’s meeting minutes due later today to help determine the future path for the greenback.
During the previous quarter, U.S. Treasury yields soared, and the dollar showed its strongest rally in years. Traders expected that accelerating U.S. economic growth and inflation would force the Federal Reserve to abandon its promise of keeping interest rates near zero for three years. Such sentiment boosted the greenback.
On Tuesday, the International Monetary Fund announced that unprecedented public spending to defeat the coronavirus pandemic would push global growth to 6% this year. However, the bond market has steadied during this week. The 10-year U.S. Treasury yield stands at 1.64%, tumbling down from its high of 1.776% at the end of March.
The dollar traded at 92.368 against a basket of currencies, remaining close to a two-week low. The currency has fallen from its recent peak of 93.439, which it hit on March 30.
ING strategists noted that traders would be scanning the Fed meeting minutes later today. They will search for any discomfort among policymakers about soaring inflation prospects.
How Did the Euro and Other Currencies Fare?
Euro remained steady at $1.18705. The currency strengthened in April. Thus far, it has struggled due to the economic rebound prospects in Europe lagging behind that of the United States and the U.K. However, the Euro has surged forward over the past week.
UBS noted that it expects a catch-up as the COVID-19 vaccination rollout accelerates, enabling eased restrictions. Even though it has recently lowered its forecasts for Eurozone GDP growth in 2021 to 4.3%, from 5% previously, the sentiment is optimistic.
Meanwhile, the Australian dollar declined against the dollar, dropping by 0.4% at 0.76385. The New Zealand dollar also plummeted down by 0.3%. The Canadian dollar also lowered, hurt by a third wave of the coronavirus pandemic in the country.