USD Bounces as its 10-year bond yield surpasses 3%

Any major news event or announcement impacts currency rates as traders and investors analyze the impact of these events. From interest rate announcements to activities of terrorism, each major event can significantly appreciate or depreciate a currency’s value. It was just today that the United States Dollar (USD) became more valuable in the eyes of traders as the yield on ten-year bond rose above 3% for the first time in last four years.

As a result of this news, USD value rose to its highest during the last four-month period against the Great Britain Pound (GBP), New Zealand Dollar (NZD) and four other major currencies. The USD Index is used to measure the strength of this currency against six other major currencies, and it reached to 90.42 today, resulting in a substantial increase of 0.42%. This is the highest level achieved since Jan, 12 of this year.

As an investor, it is important to understand the relationship between any major event and the reasons why it impacts the currency rates. In this particular case, it is to be understood that Dollar became more attractive for investors because of higher interest rates as investors expect to earn better yield. Higher yield rates also portray more confidence in the US economy. hence, making it an attractive marketplace.

Following is how different major currencies reacted against this increase in USD value.

  • EUR/USD fell to 1.2185, down by 0.39%. Also the lowest in last two months.
  • GBP, after losing its value against USD by 0.25%, fell to its five-week lowest at 1.3941.
  • With 0.34% increase in value, USD rose to 109.18.
  • Australian Dollar (AUD) saw a loss of 0.55% and gone down to 0.751 while the NZD reached at 0.7060, down by 0.69%. Both AUD and NZD achieved their 4-months lowest today.

 

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