On Tuesday, the U.S. dollar was near its lowest point of the year, as markets speculated about the beginning of a U.S. easing cycle, possibly starting with a major rate cut by the Federal Reserve.
The likelihood of a 50-basis point rate cut has increased, reflecting growing expectations for more aggressive monetary easing.
This shift in sentiment has weakened the greenback and weighed on Treasury yields.
Attention is now focused on the release of U.S. retail sales. Weaker-than-expected retail sales figures could lead to a weaker dollar and lower Treasury yields.
The Federal Reserve’s interest rate decision on Wednesday remains the week’s main event. As a result, the Fed’s decision could cause significant volatility in bond yields and the currency market. A dovish Fed policy, especially if it involves a substantial rate cut, is likely to push Treasury yields lower.
