US Dollar Records Ultra-Bullish Performance Following FOMC Meeting Minutes’ Release

After trading in a prolonged choppy pattern, the US dollar (USD) enjoyed some upward mobility last week following a revelation of quantitative monetary tightening plans by the US Fed in its FOMC meeting minutes.

Benchmark US Treasury yields also recorded positive traction from the FOMC declaration as they tapped their highest level since 2019. The Canadian dollar and Australian dollar came in second and third best performers, respectively, last week. Aussie received some boost from the RBA’s hints of a possible rate hike sooner rather than later, while Loonie got bumped by reports of goodish job data from Canada.

Meanwhile, the ECB unexpectedly dropped some hawkish comments per the recent meeting minutes, as the euro became the worst-performing currency last week due to the persistence of the Russia-Ukraine war. The Japanese yen was the second weakest currency last week, while the British pound and Swiss franc traded with mixed sentiments.

US Treasury Bond Yields Enjoy Best Performance in Three Years

The US 10-year yield recorded a decent spike last week to end the week at 2.713%, a three-year high. The yield curve also recorded a mild steepening, with the 2-year yield closing at 2.466%. The 5-year yield recorded an even better weekly session and closed at 2.756%, higher than the 10-year yield.

As mentioned earlier, this goodish momentum was sponsored by reacting to the recent FOMC meeting minutes, as the institution revealed plans of a US$95 billion per month balance sheet runoff (with $60 billion in treasury securities and $36 billion in MBS holdings). That said, the mentioned quantitative tightening should begin next month.