US Dollar Gains After Massive Debt Selloff, Economic Data

The US dollar rallied against most other major currencies on Monday, rebounding from last week’s disappointing performance. The jump in the greenback occurred following several key economic reports and a massive selloff in US government debt holdings.

It was reported that the Bank of Japan (BOJ) is considering adopting changes to its trademark yield curve control policies, leading investors to sell their US and Japanese government bonds. The trend helped push up yields – the 10-year US Treasury yield advanced 0.03% and the 10-year Japanese government bond yield rose 0.05%.

Elsewhere in the world of monetary policy, President Donald Trump slammed the Federal Reserve for raising interest rates. Despite lamenting on artificially low rates during the 2016 election campaign trail, the president said rate hikes are negatively impacting what his government is doing to spur economic growth, create jobs, and Make America Great Again.

Treasury Secretary Steven Mnuchin and Trump did note that they respect the central bank’s independence, which has been a point of contention since a former candidate to helm the Eccles Building said he does not believe Trump understands or respects the institution’s independence.

During last week’s testimony to the Senate Banking Committee and House Financial Services Committee, Fed Chair Jerome Powell projected that the US economy looks in great shape heading into 2019, hinting that the normalization of rates will continue as anticipated.

Also, traders are still paying close attention to what President Trump and his administration are doing pertaining to international trade. Both  Mnuchin and President Trump have revealed that the White House is thinking about slapping tariffs on all $505 billion worth of Chinese goods.

On the economic news front, the Chicago Fed National Activity Index (CFNAI), which is used to measure economic activity, registered at 0.43 in June, up from negative 0.45 in the previous month. Meanwhile, the National Association of Realtors reported on Monday that total existing-home sales tumbled 0.6% to a seasonally adjusted annual rate of 5.38 million in June, down from 5.41 million in May.

The US Dollar Index gained 0.07%.

The USD/CAD currency pair was left unchanged at 1.3172 at 03:15 GMT on Tuesday. The USD/JPY slipped 0.09% to 111.25.

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