This website uses cookies in order to improve user experience. If you close this box or continue browsing, we will assume that you are happy with this. For more information about the cookies we use or to find out how you can disable cookies, see our Cookies Notice.

Chart of the week

Euro supported by yield spreads

The U.S. dollar has lost some ground against the euro over the past few days. Factors from both sides of the Atlantic have contributed to this move. For one thing, the U.S. Federal Reserve (Fed) has raised its policy rate at the March meeting, but sounded less aggressive than anticipated by market participants. As a result, yields of 2-year Treasury bonds declined by 12 basis points. On the other hand, rumors about the European Central Bank considering an entry into the exit of its uber-expansionary monetary policy led to an increase of 2-year German Bund yields by 7 basis points. Thus the yield disadvantage of European sovereign bonds versus their U.S. counterparts shrank by 0.2 percentage points, which strengthened the euro versus the U.S. dollar. As we expect the Fed to continue tightening, the yield spread should widen again, thus leading to a stronger dollar.

Euro supported by yield spreads

Sources: Bloomberg Finance L.P., Deutsche Asset Management Investment GmbH; as of 3/23/17

Related Articles

Jul 03, 2018 Investment Traffic Lights

Investment Traffic Lights

Our tactical and strategic view

Jul 03, 2018 CIO Special

Dollar pros and cons

The dollar has already reached our target. Currently, the arguments are balanced.

Jun 29, 2018 Chart of the week

Chart of the week

Do weak currencies hurt emerging markets?

Jun 21, 2018 Macro Outlook

Ten years after

The long reach of the financial crisis

Jun 15, 2018 Americas CIO View

Americas CIO View

Inflation: Sometimes it skips a generation

Jun 15, 2018 Chart of the week

Chart of the Week

Looking at real federal funds rates, not a lot has happened after 7 hikes

Jun 04, 2018 Investment Traffic Lights

Investment Traffic Lights

Our tactical and strategic view

Jun 01, 2018 Chart of the week

Chart of the Week

Why emerging markets may be less vulnerable than they used to be

May 29, 2018 CIO Flash

Euro crisis 2.0?

Italy's political woes are dragging down markets while boosting our dollar call.

May 03, 2018 CIO View QuarterlyFocus Topic

Rising interest rates

Will rates unrattle equity markets?

May 03, 2018 Investment Traffic Lights

Investment Traffic Lights

Our tactical and strategic view

Apr 27, 2018 Chart of the week

Chart of the week

U.S. bond yields leave German yields further behind. Is the dollar following suit?

Apr 24, 2018 Americas CIO View

Americas CIO View

Sizing up Banks and Tech

Apr 17, 2018 CIO View QuarterlyMacro Outlook

As good as it gets?

So far, our upbeat base case for the global economy is looking good

Apr 17, 2018 CIO View QuarterlyLetter to Investors

One more year

Markets are shaky, but a bear market is unlikely without recession.

Apr 17, 2018 CIO View QuarterlyForecasts

Our forecasts

All forecasts at a glance

Apr 16, 2018 CIO View QuarterlyFixed Income

Pockets of opportunity

We continue to see opportunities, especially in high yield. Buy the dips.

Apr 16, 2018 CIO View QuarterlyEquity

Hold your nerve

Based on our growth and interest-rate forecasts, we remain bullish on stocks.

Feedback

Please let us know what you think about this article/page.