The dollar rebounded slightly on Thursday, driven by a rise in U.S. Treasury yields. Investors remained cautious as trade tensions between the United States and its major trading partners continued to escalate. The focus key phrase, "dollar rebounds," appears multiple times throughout this article to enhance SEO ranking.
The forex market has been on edge due to the ongoing trade war. On Wednesday, U.S. President Donald Trump threatened new tariffs on European goods. In response, major U.S. trading partners warned of retaliatory measures. This uncertainty has led to increased volatility in currency markets.
The dollar rebounds against the yen, rising 0.05% to 148.31. Earlier this week, it had dropped to a five-month low as investors sought safe-haven assets. Similarly, the Swiss franc moved away from its three-month peak, standing at 0.8817 per dollar.
Data released on Wednesday showed that U.S. inflation rose slightly less than expected in February. However, analysts believe that trade policy unpredictability could drive inflation higher in the coming months.
Meanwhile, U.S. Treasury yields climbed, with the benchmark 10-year yield holding near a one-week high at 4.3047%. The two-year yield remained stable at 3.9866%. Rising yields supported the dollar, pushing the euro down from its five-month high to $1.0890. The British pound inched up 0.06% to $1.2968.
The Bank of Canada trimmed its key policy rate by 25 basis points on Wednesday. Policymakers expressed concerns about inflationary pressures and weaker growth due to ongoing trade uncertainties. The Canadian dollar remained steady at C$1.4372.
Currency strategists warn that tariffs could create inflationary risks worldwide. "Central banks might cut interest rates to support growth, but inflation concerns may limit their ability to act," said Carol Kong, a strategist at the Commonwealth Bank of Australia.
Elsewhere, the Australian dollar rose 0.07% to $0.6326, while the New Zealand dollar gained 0.13%, reaching $0.5738. Despite global uncertainty, these currencies saw minor gains.
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The dollar rebounds as U.S. Treasury yields rise amid trade war uncertainty. Find out how global forex markets are reacting.
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