The US dollar tested higher against the Loonie as risk-on sentiment has led to a rally in equities and yields but ended up lower in the Japanese session. US benchmark yields climb higher despite the extension of geopolitical conflict.
The ten-year yield rose 6.4 basis points, reaching 2019 highs after Powell’s statement about the Fed potentially hiking rates 50-basis points in one of the upcoming meetings to crucial inflation. Gold prices plunged as yields surge as its safe-haven qualities are less appealing in a risk-on market. Oil prices fell, reversing yesterday’s gains as the E.U. decides whether to participate in the Russian oil embargo.
Traders have begun to price in a 50-point rate hike in May. This act comes after Fed Chair Powell’s comments about how the Fed will be more insistent about hiking rates a half-point if necessary to control mounting inflation. His comments resulted in a sharp sell-off of the bond market and created a rally in bond yields and equities. Additionally, U.S. Crude Oil inventory data comes at later today, and analysts expect there to be no change in oil stocks.
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