Markets Overview: Dollar rises; Euro stays soft and Aussie slips

On Tuesday, the US Dollar strengthened against its peers taking its cue from higher US Treasury Yields, as investors are waiting for the minutes from the Federal Reserve’s latest meeting on Wednesday for signals to the pace of interest rate hikes. Higher US Yields boosted the greenback, after US markets were closed for the Presidents Holiday on Monday.

Meanwhile, recent comments from Fed officials were hawkish as they maintained their general view of three rate hikes this year, and they reinforced the chance for a US interest rate increase for March. Philadelphia Fed President Patrick Harker said that a March hike isn’t off the table.

The Euro slid yesterday, pressured by the French election that could upset the status quo, as rising anti-establishment sentiment surfaced after last year’s Brexit and US election. The premium that investors demand to hold French Bonds instead of German debt rose to its highest since late 2012 after a poll showed the far-right Marine Le Pen narrowing the gap with more centrist opponents

Meanwhile, the Australian Dollar weakened 0.25% against the US Dollar after the release of the minutes from February’s RBA monetary policy meeting, at which the Central Bank held rates at 1.5%.

The minutes showed that the Central Bank expected recovery in the global economy to list resources exports: “The higher terms of trade represented a boost to national income, which provided some upside risks to the domestic forecasts.” 2017 is forecast to be a good year with 3% GDP growth, “above estimates of potential growth over the rest of the forecast period.”