Dollar surrenders to euro and yen as rate supremacy ends

[Eugene]

Source: Reuters

BUSINESS NEWS MARCH 5, 2020 / 6:52 PM / UPDATED 19 MINUTES AGO

Dollar surrenders to euro and yen as rate supremacy ends

Wayne Cole
3 MIN READ

SYDNEY (Reuters) - The dollar nursed savage losses against the yen and euro on Friday as a plunge in U.S. yields to record lows wiped out the currency’s single greatest attraction for investors - higher interest rates.

Mounting fears over the fallout from the coronavirus has driven a truly tectonic shift in expectations for U.S. rates as markets wager the Federal Reserve will have to cut rates by 50 basis points for a second time this month. FEDWATCH

The resulting collapse in Treasury yields has been the death of one of the most popular carry trades globally - borrowing at negative rates in the euro and yen to buy U.S. assets.

“Select USD pairs like EUR/USD are turning because of a dramatic and decisive shift in U.S. rate expectations and related spreads,” said Alan Ruskin, global head of G10 FX strategy at Deutsche Bank.

-snip-

Read more: https://www.reuters.com/article/us-global-forex/dollar-surrenders-to-euro-and-yen-as-rate-supremacy-ends-idUSKBN20S33L

[Squinch]

1. This is huge and yet will go unnoticed.

[at140]

2. Lower interest rates (0.5% cut by Fed this week) makes money flee for better

yield abroad and dollar falls. No surprise at all. Trump keeps pushing for even lower than already artificially low rates because his business empire borrows tons of money and every drop in interest rate makes his business millions in additional profits.

[Farmer-Rick]

3. Thanks Trump...