The U.S. dollar remains supported by high yields even after last week's soft U.S. jobs data prompted markets to trim Federal Reserve interest rate rise expectations, ING's Chris Turner says in a note. Relatively low G-7 foreign exchange volatility should encourage more interest in carry trades, where investors borrow in low yielding currencies to purchase higher yielding currencies, he says. One-week dollar deposit rates are in the top half of the G-10 table, he says. Markets are pricing in 30 basis points of rate rises this year, LSEG data show. The Federal Reserve's meeting minutes on Wednesday could signal potential tightening, lifting the dollar, Turner says. The DXY dollar index rises 0.2% to 101.084, and ING sees scope for further gains. (renae.dyer@wsj.com)
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Demand for Carry Trades Could Lift Dollar — Market Talk
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The U.S. dollar remains supported by high yields even after last week's soft U.S. jobs data prompted markets to trim Federal Reserve interest rate rise expectations, ING's Chris Turner says in a note. Relatively low G-7 foreign exchange volatility should encourage more interest in carry trades, whe…