US yield spreads push relentlessly in the USD’s favour - Westpac

Analysts at Westpac explained that yield spreads continue to push relentlessly in the USD’s favour.

Key Quotes:

"At +206bp the 2yr DXY weighted spread is at its most supportive levels since 2006. Admittedly the USD has a stronger relationship with long-term bond spreads but they are moving just as strongly in the USD’s favour too.

Against that, the USD’s responsiveness to yield spreads shifts around a lot over time. And, while the USD’s responsiveness to firming yield spreads is very low at the moment it has been even lower in the past."