Dollar bounces back on economic optimism, higher yields. The Bank of England delivered a dovish surprise, with 2 dissenters to keeping the rate steady.
Optimism surrounding the striking of a possible US-China trade deal swept through financial markets on Thursday, lifting risk assets and triggering a reversal in recent safe-haven flows.
Safe-havens gained, while emerging market currencies sold-off on Wednesday on expectations that the yet to be ratified ‘phase one’ trade agreement between the US and China may have to wait until December before signed off.
Hopes that US President Trump could be ready to roll back some of the tariffs he imposed on China as part of the ‘phase one’ trade deal helped boost the dollar against the safe-haven currencies on Tuesday, as did an increase in US Treasury yields.