The US dollar is currently performing well but the euro continues to depreciate as markets pay attention to market players' reactions to rising bond yields. Meanwhile the New Zealand currency fell to a three -month low due to new moves in the housing market.
Global markets took a cautious stance with futures equity markets also showing a decline following the decline in Asian markets.
The United States, the European Union, Britain and Canada recently imposed sentences on Chinese officials on Monday for human rights violations in Xinjiang. Following that, Beijing responded with punitive action against European lawmakers, diplomats, institutions and family members.
Also a factor of caution market players is the third wave of the Covid-19 outbreak in Europe. Germany took a ‘lockdown’ measure and urged their citizens to stay at home for five days.
The European Central Bank's chief economist, Philip Lane, said that the central bank would play its role in keeping government bond yields at very low levels.
The US dollar index, which measures the greenback against other currencies, was strong by 0.44% to the exchange rate of 92.115 as of 9.15 p.m.
The euro fell back below 1.19000. Analysts believe the ECB is more concerned about rising bond yields, hence the possibility of tightening monetary policy.
The kiwi dollar, which has been pressed by New Zealand Prime Minister Jacinda Ardern’s announcement to introduce the latest aid package to control rising house prices, sank lower due to the strengthening USD.
Market players are now focusing on congressional evidence to be announced by the ECB more concerned about rising bond yields. This is to get more information about their reactions and to determine the direction of the US dollar.
