© Reuters.
Investing.com – The dollar was down against the euro and the pound sterling at the start of trade in Europe on Wednesday, while a decline in yields of the u.s. Treasury has reduced its appeal to the expectations of new dovish tone on interest rates from the federal Reserve.
Bond yields are under pressure from economic data that tend to be rather low these last few days. The benchmark 10-year Treasury fell from 2.80% in last month to 2.64%, in a climate of uncertainty within the budget limits of the federal Reserve to tighten its monetary policy.
This uncertainty puts the emphasis Wednesday on the publication of the minutes of the last meeting of the Federal Open Market Committee, where the u.s. central bank has adopted a more neutral position and dependent data, and thus gave up indications on the likelihood of further increases in interest rates.
Traders will also seek clues on the pace and the speed with which the Fed intends to reduce its balance sheet. Loretta Mester, president of the Cleveland Fed, said on Tuesday that it was in favour of the end of the program of liquidation of the balance sheet this year, a result which will leave a substantial amount of liquidity during the crisis period in the system, limiting any rise in market interest rates. At the same time, it said that official interest rates were still more likely to climb than fall.
At 03h20 (08: 20am GMT), the dollar index, which measures the greenback against a basket of major currencies was 96,333, down over half a per cent to its highest level overnight. The euro has been close to the top of a week to 1,1351 after that the price inflation in the German production in January have been higher than expected.
The pound sterling was rising against the dollar and the euro after the announcement that the first minister Theresa May would abandon its efforts to advance the so-called “compromise of Malthouse” – an attempt to break the impasse on the status of the border irish after the Brexit. The leaders of the EU had indicated that it was unacceptable. The month of may is expected to take place Wednesday in Brussels with the president of the european Commission, Jean-Claude Juncker.
In the night, the chinese yuan has gained 6,7227 after the us government announced that the United States would use trade talks underway to obtain a commitment from China not to devalue its currency.
The Aussie and the Kiwi have both been slightly weakened by the lack of important news.
