Another tough week for dollar bulls

Despite a bounce today, the US dollar is set to end the week lower against most currencies and around its weakest level, in aggregate, in a year. This partly reflects that, even though Treasury yields are set to end the week higher following today’s surge, yield gaps vis-à-vis most other major economies have shifted slightly against the greenback over the week. But the more important factor behind the dollar’s decline seems to have been a pick-up in risk appetite: global equities are close to a 10-week high after investors seemingly took a glass half full view of this week’s run of mixed economic data in the US.