Higher bond yields in the U.S. combined with the lowest growth target in China in 30 years to support the greenback.
The U.S. Dollar Index that tracks the greenback against a basket of currencies rose 0.02% to 96.70 by 11:50 PM ET (4:51 AM GMT). U.S. Treasury yields pulled back from peaks in late January but demand for the dollar remains strong.
On Monday, stock markets in the U.S. gained and then plummeted as concerns that a much-anticipated trade deal between the U.S. and China could fail to deliver significant gains to global growth.
“The dollar firmed, stocks fell and U.S. Treasuries rose in the broader market, and we are bound to see the dollar gain against some currencies while slipping against others in such a situation,” said Shin Kadota, senior strategist at Barclays (LON:BARC), according to Reuters.
Further supporting the dollar and pressuring the Chinese yuan was the work report by Chinese Premier Li Keqiang at the opening of the 10-day annual meeting of the National People’s Congress (NPC). Li said China will target GDP growth of between 6% and 6.5% for 2019, which would be the lowest rate in 30 years. Li also announced significant cuts to the value-added tax (VAT) that could support manufacturing.
The People’s Bank of China set the yuan‘s reference rate lower on Tuesday at 6.6998 compared to 6.7049 on Monday.
The immediate focus in Australia on Tuesday was on the outcome of the Reserve Bank of Australia’s (RBA) March policy meeting later in the day. The Australian dollar took. Hit last month after the RBA stepped back from a long-standing tightening bias.
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