- The US dollar trades at a one-month low.
- Market expectations for future US rate hikes have been pared back sharply.
- Safe haven assets remain bid as markets shun risk.
Short-dated government yields are falling sharply Monday as traders pile into these safe-haven assets after two US were shuttered over the weekend. While the Fed’s backstop action, protecting depositors, was seen as a positive move, financial markets currently have a bad case of the jitters. Safe-haven assets including USTs, Bunds, gold, and the Japanese Yen are all strongly bid, while indices continue to sell off.
US DOLLAR (DXY) MARCH 13, 2023
The US dollar is moving lower on the back of falling US Treasury yields and a growing sense that the Federal Reserve may pare back or even delay further rate hikes. Last week the market had been fully pricing in a 50bp hike at the March 22 FOMC meeting, while today a 25bp hike is expected with a chance of no rate hike at all now being considered.
GOLD, another safe-haven asset class made a five-week high earlier in the session, just a handful of dollars off $1,900/oz level….
GOLD DAILY PRICE CHART
while the Japanese Yen, seen as a safe currency in times of market stress, broke below 133.00 against the US dollar before rebounding slightly.
USD/JPY DAILY PRICE CHART
All of the above markets are now starting to trade at extreme levels, using the CCI indicator, and may recover part of their current moves.