· The U.S. dollar sank against its rivals on Thursday, putting it on track for its biggest two-day drop in a year after the Federal Reserve signaled it was ready to cut interest rates as early as next month.
The Fed joined global peers such as the European Central Bank and the Reserve Bank of Australia this week in signaling that more policy stimulus is needed to maintain growth. That fueled a rally in higher-yielding currencies such as the Australian dollar and the Korean won.
The dollar fell 0.47% against a basket of its rivals to 96.66, putting it on course for its biggest two-day losing streak since February 2018.
It also retreated to a six-month low against the Japanese yen at 107.45, though it had retraced some of those losses early in the North American session.
· The yield on the benchmark 10-year Treasury note fell below 2% for the first time since November 2016 overnight after the Federal Reserve on Wednesday signaled rate cuts were likely on the way.
The yield on the 10-year Treasury note fell to a low of 1.974% before rebounding slightly to 2.01% as of 4:10 p.m. ET Thursday. The yield on the 2-year note also trimmed its decline to trade at 1.757%, just above its lowest level since November 2017 of 1.7% clinched earlier in the session. The 3-month bill yielded 2.131%, 11.6 basis points more than that of the 10-year yield.
Bond yields, which move inversely to price, sunk in overnight trading after the Fed struck a dovish tone in its June policy statement and Chair Jerome Powell said that the case for easier policy had improved.
· U.S. President Donald Trump risks hurting investor sentiment if he removes Jerome Powell as chair of the Federal Reserve, according to a former American central bank governor.
Investors have in recent months become increasingly nervous as trade tensions between the U.S. and China rise. Conflict between the two major powers have threatened to derail economic growth even further at a time when the global economy has shown signs of slowing down.
“To fire a Federal Reserve governor or chairman would be a very unprecedented move, it would result in turmoil in the financial markets, it would be something that you really don’t want to do because you don’t need an absolute increase in uncertainty which this would bring about,” Robert Heller, a member of the Fed’s Board of Governors from 1986 to 1989, told CNBC’s “Street Signs” on Thursday.
· European Union leaders agreed on Thursday to prolong until the end of January 2020 economic sanctions against Russia over the turmoil in Ukraine, a spokesman for the bloc said.
· U.S. oil jumped on Thursday after Iran shot down a U.S. military drone, prompting President Donald Trump to blast Tehran on Twitter and fueling concerns of a conflict between the two countries.
U.S. West Texas Intermediate crude settled up $2.89, or 5.4%, to $56.65 a barrel after surging as much as 6% around 10 a.m. ET. Brent crude, the global benchmark, was up $2.79 — a 4.5% increase — at $64.61 a barrel.
Trump took to Twitter Thursday morning to criticize what U.S. officials say was Iran’s attack on a U.S. surveillance drone earlier in the day, saying that Tehran made a “very big mistake.”
Trump said later Thursday that the public will “find out” about whether the U.S. plans to retaliate with a military strike, but said he finds it “hard to believe it was intentional.”
· President Donald Trump told reporters Thursday that Iran may not have intentionally downed an unmanned U.S. surveillance drone. He said the public will “find out” about whether the U.S. intends to retaliate with a military strike.
“I find it hard to believe it was intentional,” Trump said during a White House meeting with Canadian Prime Minister Justin Trudeau.
Reference: CNBC, Reuters
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