FOREX-Dollar hits 6-week high vs yen on Mnuchin bond hints

With European markets returning after Monday's May Day holidays, the greenback gained around a quarter of a percent to trade as high as 112.18 yen, its strongest since March 31 and close to a six-week high of 112.21 yen. The dollar hit a one-month high against the yen on Tuesday, lifted by a surge in U.S. government bond yields after U.S. Treasury Secretary Steven Mnuchin commented on the possibility of ultra long-term bond issuance. "Mnuchin's comments have at least stabilised the long end of the curve," said Lee Hardman, a currency economist with Japan's MUFG. The dollar has fallen almost 4 percent against the euro in the first four months of 2017. It traded less than half a cent off last week's 5-1/2 month high of $1.0951.


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FOREX-Dollar hits 6-week high vs yen on Mnuchin bond hints

With European markets returning after May Day holidays, the greenback gained around a third of a percent to trade as high as 112.31 yen, its strongest since mid-March. The dollar hit a six-week high against the yen on Tuesday, lifted by a surge in U.S. government bond yields after U.S. Treasury Secretary Steven Mnuchin commented on the possibility of ultra long-term bond issuance. The "Trumpflation" trades that dominated the end of last year, driving Treasury yields and the dollar higher on expectations of higher inflation, growth and official interest rates, have faded this year. Nomura analyst Jordan Rochester argued there was a risk of the economy surprising on the upside as European growth strengthened, turning the Bank of England less pessimistic and reheating expectations of higher interest rates. The Fed is widely expected to keep interest rates unchanged at a two-day policy meeting that begins on Tuesday, but its attitude to the recent data will be crucial for market expectations of another rise in interest rates in June.




The dollar was boosted as long-term Treasury yields soared to multi-week highs after Mnuchin reiterated his view in an interview with Bloomberg, saying the government issuing debt exceeding 30-years in maturity "can absolutely make sense." The jump in U.S. debt yields helped the dollar brush off negative pressure from downbeat data. The euro traded at 122.00 yen after touching a 1-1/2-month high of 122.150. The greenback last traded at 111.800 yen after touching 111.945, its highest since March 31. "The dollar is moving in tandem with Treasury yields, which saw its benchmark rise above the 2.3 percent threshold with Mnuchin seemingly very enthusiastic about issuing so-called ultra long-term bonds," said Yukio Ishizaki, senior currency strategist at Daiwa Securities.


collected by :John Miller

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