Currencies Overview: Dollar Stumbles as US Treasury Yields Decline

The US dollar fell from its highest in four months against a basket of currencies on Monday, matching a drop in US Treasury yields.

The dollar index fell 0.34% to 91.780 at the end of the trading session, after gaining 0.5% last week.

The US Treasury yield fell today from its highest in 14 months, but remains near its highest level in a year as investors bet on the economy’s recovery.

Bond yields jumped after the Federal Reserve said last week that the US economy is on its way to strong growth.

At the weekend, Turkish President Recep Tayyip Erdogan’s sudden decision to dismiss the central bank governor and appoint a critic of high interest rates in his place led to the lira at one stage dropping 15% to 8.485 per dollar before closing down 10%, its worst drop since 2018.

The dollar was supported by fears that the Turkish market developments would negatively affect others, so that the US currency in particular rose against the Australian dollar and the Norwegian kroner.

The pound fell against the dollar, as investors focused on the factors driving the exchange market in general and the European Union threatened to impose a ban on vaccine exports to Britain.