Dollar boosted by soaring yields

What you need to take care of on Wednesday, April 6:

The American dollar is the overall winner on Tuesday, firmly up against all of its major rivals. Diminishing chances of a diplomatic solution to the Russia-Ukraine conflict and central banks’ aggressiveness were behind the market’s movements.

At the beginning of the day, the Reserve Bank of Australia abandoned its patient stance, providing an unexpected boost to the local currency. Governor Philip Lowe dropped the sentence “prepared to be patient” from its usual statement and hinted at an interest rate hike in June. The last time the RBA hiked was in 2010. Lowe also said that policymakers will now focus on inflation and labour costs data. The Australian Federal election will take place in May.

During the American afternoon, US Federal Reserve Governor Lael Brainard hinted at an aggressive reduction of the balance sheet and noted that combined with rate hikes would move monetary policy closer to neutral later this year. His words sent the yield on the 10-year Treasury note to 2.567%, now holding nearby.

Meanwhile, the EU is analyzing a ban on Russian coal imports as the US increases oil imports from Canada.  France’s Europe Affairs Minister Beaune said that a new round of sanctions against Russia would most likely be imposed on Wednesday.

The EUR/USD pair plunged to 1.0900 while GBP/USD trades around 1.3076. The AUD/USD pair managed to retain some of its post-RBA gains but pulled down from a fresh 2022 high of 0.7660.  USD/CAD nears 1.2500 as crude oil prices edged sharply lower, with WTI currently hovering around $100.00 a barrel.

Gold traded as high as $1,944.56 a troy ounce, now struggling around $1,920, amid renewed demand for the greenback.

The US FOMC will publish the Minutes of its latest meeting on Wednesday.

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