US Dollar Index and Treasury Yields Are Strong on August 31

CIBC Capital Markets trade on the Euro Dollar

US Dollar Index and Treasury Yields Are Strong on August 31

This year's pick-up in growth has stoked talk in the markets that the bank will soon follow the U.S. Federal Reserve in bringing an end to the emergency measures it put in place during the past few crisis-ridden years.

Gasoline futures surged 13.5 percent as nearly a quarter of USA refining capacity remained offline due to Tropical Storm Harvey and traders scrambled to reroute millions of barrels of fuel.

Wall Street had got a boost on Wednesday when data showed the US economy grew at an upwardly revised 3 percent annualised pace in the second quarter, courtesy of robust consumer spending and strong business investment.

The single currency surged above 1.20 to the dollar, breaching a key level as investors grew bullish about its outlook after the head of the European Central Bank refrained from talking about the currency's recent strength and in the backdrop of brewing USA fiscal problems.

Initially, North Korean tensions and concerns about damage from Hurricane Harvey surfaced the market and weighed on the USA dollar.

Analysts said a measured response from the United States to North Korea's ballistic missile test early on Tuesday had also helped ease a rush into bonds, which are seen by investors as a safer store of cash than equities in times of crisis.

"Tax reform has been one of the biggest reasons for the rally and I think it is going to go through", said Ben Barzideh, wealth adviser at Piershale Financial Group.

It rose for six consecutive months through August, briefly touching a 2-1/2 year high above $1.20 this week.

In China, the Shenzhen A Share index closed up 0.3%, while Hong Kong's Hang Seng ended the day down 0.4%.

More news: President Trump calling on Congress to rewrite the nation's tax law

Benchmark 10-year U.S. Treasury notes were up 7/32 in price to yield 2.1222 percent, down from 2.145 percent on Wednesday.

"Stocks are rebounding today because there is a perception that North Korean tensions have eased", said William Hamlyn, investment analyst at Manulife Asset Management.

Meanwhile, the euro continued to strengthen against the greenback in the wake of European Central Bank Mario Draghi's speech at Friday's Jackson Hole summit, in which he appeared reluctant to mention the euro's strength.

His comments support the euro, which bounces from the lows and recaptures the 1.19 level.

Market uncertainty about what tone the European Central Bank could take in its meeting prevented the Euro from benefitting from a better-than-expected Eurozone inflation print.

The ECB is expected to keep its interest rates on hold through to next year.

The greenback briefly pared gains after Trump dismissed any diplomatic negotiations with Pyongyang, saying "talking is not the answer".

The pound was slightly higher against most other major currencies, buying $1.2927 compared with $1.2919 late Tuesday in NY. Brent eased 9 cents to $50.77 a barrel, while USA crude hovered at $46.05. However, the increase was mainly driven with higher prices in the energy sector and the "core" inflation remained steady at an expected 1.2% yoy.

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