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Dollar slips as risk-on sentiment grows and longer yields fall

FXStreet reports the US Dollar Index broke below its 99.40 to 100.00 range, with ING expecting scope for a drift toward 98.65.

Reported · Written up by our desk · Major Pairs

ING’s Chris Turner says US Treasury buyback operations and a drop in longer-dated yields have helped support equities while putting downward pressure on the US dollar. FXStreet notes the July FOMC minutes were not particularly hawkish, leaving the dollar with a flat-to-lower tone.

FXStreet adds that a 10 basis point decline in longer-dated US yields coincided with a “risk-on, dollar-off” setup. ING said the dollar softened particularly versus high-beta currencies, including the Norwegian krone, New Zealand dollar, and Swedish krona.

ING’s Turner pointed to July FOMC reactions, saying short-dated US yields fell about 5 basis points after the minutes release. With US rates moving lower across parts of the curve, ING expects carry trade strategies to stay popular.

FXStreet reports ING expects the US Dollar Index, or DXY, could drift lower, moving from its recent 99.40 to 100.00 range and targeting around 98.65. ING said the next level to watch would be 98.00 if risk assets extend higher as the Treasury stays more vigilant toward the long end of the bond market.

Latest closeDollar index 99.64 ▼0.3%

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