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There is rate support for US dollar – IIF

There is a fundamental reason not to be bearish on the US dollar as the long-term US bond yields are trading significantly higher than their Eurozone counterparts, according to Robin Brooks, Chief Economist at the Institute of International Finance (IIF) and former Chief FX Strategist at Goldman Sachs. 

“Longer-term US rates, beyond the reach of Fed QE, are up lots, unlike Eurozone. There’s rate support for USD,” Brooks tweeted on Wednesday. 

The US 10-year yield is currently seen at 0.738%, while the German 10-year yield stood at -0.639%. 

Markets sold US dollars in the run-up to the US elections on expectations that Democrats would gain control of both the House and the Senate and deliver a massive fiscal spending package. However, the hopes of a Democratic blue sweep have been dashed with President Trump scoring victory in key states such as Florida. 

 

 

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