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The US Dollar surged from the 110.50 level to the 114.50 level starting from September 7, 2018, until October 4, 2018. The rate surge for almost a month was a market reaction of the combination of economic news of the simmering anxiety about higher U.S. bond yields, the U.S and China trade war and political turmoil in Europe.
It has already been ten years since the last financial crisis appeared in the world economy. The 10-year treasury yield crept up to seven-year high. U.S. futures and Asian shares fell as European equities gave up an early gain come together with other important economic issues which let economists think about a new world financial crisis appearance in the near-term future. The following political issues helped the dollar strengthen across the board with only Japan's yen outperforming among the major currencies. It is important to watch for news to stay ahead of the market to keep the power in the world economy.
Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo commented: "The rise of U.S. Treasury yields is causing a correction of U.S. equity markets, which is typically a risk-averse situation and causes the stronger yen,".
The currency pair gained 3.65% or 404 pips during the surge followed by the fundamental news. "The fall of the dollar/yen, typically below 113, is a good chance to buy the dollar on dips," he said.