Dollar declines to four-week trough amid a selloff

Dollar declined in European trade to four-week lows against major rivals on active profit-taking as risk appetite improves in the market. 

The tumble in the US bonds market last week is a major reason behind such a decline today.

The dollar index shed over 0.9% to 102.07, the lowest since April 26, after closing up 0.15% on Friday, following a 1% tumble on Thursday, the heftiest loss since March 9.

The dollar index fell 1.4% last week, the first loss in seven weeks, and the largest since late January.

Investors now don't expect the greenback to achieve further gains as all Fed rate hikes are mostly priced in already.

Chinese Economy

China is starting to loosen up restrictions on movements in major cities as Covid 19 infections decline, while China's central bank took a bold move and cut interest rates to bolster economic activities.

Shanghai, a 25 million people city, is preparing to return to normal life by June 1.

Otherwise, the People's Bank of China cut five-year interest rates for loans by 15 basis points to 4.45%, the largest such decrease since 2019.

US Bonds

US 10-year treasury bond yields fell to three-week lows at 2.774%, even as the Fed vows to hike rates consecutively to combat inflation.

Markets now worry about genuine recession risks due to inflation and a rapid increase in interest rates.