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US Dollar: Quickly Becoming a Low Yielder
By DailyFX Updates | January 22, 2008
The surprise 75bp interest rate cut delivered by the Federal Reserve this morning brought US interest rates down to 3.50 percent, making the US dollar the third lowest yielding currency in the developed world. More specifically, US rates are now 50bp less than Eurozone and Canadian Rates, 200bp less than UK rates, 325bp less than Australian interest rates and 475bp less than New Zealand’s interest rates.
The futures curve suggests that we could realistically see another 100bp of easing by the end of the year, which would put US interest rates below Switzerland’s. At that point, the only currency that would yield less than the dollar would be the Japanese Yen.
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