Dollar Edges higher; Growing risk aversion helps by Investing.com

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By Peter Nurse

Investing.com – The dollar traded higher on Wednesday, benefiting from rising Treasury yields, cautiousness ahead of the European Central Bank policy meeting and concerns about global growth.

At 2:55 am ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, gained 0.1% to 92.635, just above its highest level so far in September.

rose 0.2% to 110.44, fell 0.1% to 1.1833, fell 0.2% to 1.3760, while risk sensitivity fell 0.2% to 0.7370, following the Reserve Bank of Australia’s decision on Tuesday to extend its bond purchase program until February.

The benchmark 10-year Treasury note was trading at 1.37% early Wednesday, just off Tuesday’s high of 1.39%, which was the highest level since mid-July, and a thumbs up to the dollar.

This yield skyrocketed following Friday’s disappointing disappointment, which the market interpreted as suggesting that the Federal Reserve’s cut to its bond buying program would be delayed despite a wave of high inflation impressions. .

The weak report added to fears that the increase in Covid cases, with the United States recording around 650,000 deaths and surpassing 40 million cases last week, will dampen US economic growth in the second half of the year. Earlier this week, influential investment bank Goldman Sachs (NYSE) lowered its estimate of GDP growth in 2021 in the United States to 5.7% from 6.2%.

The next meeting of the, with discussions about the potential reduction of its increasingly boisterous monetary stimulus, is also attracting some caution.

“The time to end pandemic-era bond buying is not here, but we believe the ECB will decide to slow the pace of its bond purchases at its meeting,” analysts said. from Nordea, in a note. “Financial markets might interpret such a step with a slightly hawkish slant.”

Before Thursday’s meeting, the and are scheduled to meet later Wednesday.

The BoC is not expected to change monetary policy at this meeting, especially after disappointing second quarter GDP data. The Polish central bank is also expected to leave its benchmark at an all-time high of 0.1%, for more than a year, but the fastest inflation in the European Union is putting pressure on the bank to raises interest rates.

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