Trump Triumphs in New Hampshire Primaries as Dollar Gains Strength

In a dynamic financial landscape, the yields of American bonds exhibited a mixed pattern, with a drop at the short end and an increase at the long end. The Bank of Japan, meanwhile, maintained its monetary policy parameters unchanged. The dollar witnessed a strengthening trend, fostering positive sentiments in the stock markets. Notably, Donald Trump secured victory in the New Hampshire primary, marking his second consecutive win against former UN ambassador Nikki Haley.

The EUR/USD rate experienced a temporary dip to new local lows at 1.0820 yesterday, only to rebound to around 1.0880 today. Simultaneously, yields of American bonds saw fluctuations, with a decrease at the short end and an uptick at the long end. The Bank of Japan’s decision to retain its interest rate at -0.1% and the target yield on 10-year bonds at approximately 0 percent was in line with expectations. Governor Kazuo Ueda indicated confidence in achieving the BOJ forecasts, hinting at a potential interest rate hike later in the year.

Trump’s consecutive victories in the primaries bolster his chances for success in the upcoming fall race, possibly leading to a stronger dollar and higher long-term rates. Although the recent EUR/USD declines may have been influenced by US political events, their impact was modest and fleeting. The focus remains on the Federal Reserve and its timeline for monetary policy easing, with potential implications for the dollar in the latter half of the year.

Chinese shares experienced an upward surge following reports of authorities contemplating a market rescue plan. The CSI300 index increased by 0.4%, while the Hang Seng index gained 2.6%. Morning PMI results for Europe revealed a decline in the services sector index for the euro zone to 48.4 in January, indicating six consecutive months of economic contraction. Despite a notable improvement in the manufacturing sector index, which rose from 44.4 to 46.6, the industry is still on the path to recovery.