At Extreme Investor Network, we understand the importance of staying informed about the latest updates in the Stock Market and trading world. Today, we dive into the recent struggles of the euro amid political concerns and how it has impacted the Dollar Index and Treasury Yields.
The euro has been trading nearly flat at $1.0701, showing a slight recovery after hitting a low of $1.06678 on Friday, the weakest since May 1. Investor worries about a potential budget crisis in the eurozone have intensified as far-right and leftist parties have gained traction ahead of France’s surprise parliamentary election. This poses a challenge to President Emmanuel Macron’s centrist administration and has caused the euro to drop 0.88% last week, its largest weekly decline since April.
Despite the sell-off in French financial markets, the European Central Bank (ECB) has no plans to discuss emergency purchases of French bonds, according to five sources. This political turmoil has negatively impacted the euro, indirectly bolstering the dollar since the euro constitutes about 57% of the U.S. Dollar Index (DXY).
Speaking of the Dollar Index, it has held steady at 105.52 after peaking at 105.80 on Friday, the highest since May 2. Meanwhile, U.S. Treasury bond yields have edged higher, influenced by comments from Minneapolis Federal Reserve President Neel Kashkari. He suggested that the Federal Reserve might delay rate cuts until December, calling it a “reasonable prediction.” The 10-year Treasury yield rose by 6 basis points to 4.269%, while the 2-year yield increased by 5 basis points to 4.736%.
Kashkari’s remarks come after the Fed’s updated projections last week, which indicated a single interest rate cut this year. He emphasized the need for more evidence to ensure inflation is on track to reach the Fed’s 2% target before any decisions are made. Last week, the producer price index was lower than expected for May, fueling hopes for a rate cut and lowering Treasury yields.
With the Federal Reserve maintaining rates at 5.25% to 5.50% and projecting just one rate cut in 2024, it has set a cautious tone. This week’s U.S. economic data, including retail sales on Tuesday and flash PMIs on Friday, will be closely watched for any signs of economic strength or weakness.
Stay tuned to Extreme Investor Network for more updates and insights on the Stock Market, trading, Wall Street, and more. Our expert analysis and unique information will keep you ahead of the game in the world of investing.