The dollar held steep losses near a three-month low on Thursday after the U.S. Treasury moved to calm a bond-market selloff that had pushed long-term yields to multi-year highs. The yen, won, and Australian dollar all steadied following sharp swings versus the greenback, while traders also weighed Fed meeting minutes and rising oil prices.
Treasury buybacks calm the bond market
The U.S. dollar nursed steep losses on Thursday as investors digested the Treasury Department's move to calm a bond market rattled by surging long-term yields. The dollar index stood near 98.80, after falling 0.8% on Wednesday to its lowest since late May.
Officials said the Treasury would at least double the size of some buyback operations for longer-dated bonds to $4 billion from $2 billion per operation, targeting securities with maturities of 10 years or more. As a result, the move helped push the U.S. 30-year Treasury yield down from a 19-year high of 5.337% to around 5.18%, while the 10-year yield also retreated.
The bond-market relief weakened the dollar by reducing some of the upward pressure on long-term U.S. yields and disrupting trades that had benefited from the recent rise in U.S. rates.
Asian currencies steady after sharp moves
Meanwhile, the Japanese yen's USD/JPY pair edged 0.2% higher to 158.43 yen after sliding nearly 1% in the previous session. It also remained supported by expectations of further Bank of Japan tightening after coordinated efforts by Japan and the United States to stabilize the currency.
Elsewhere, the South Korean won's USD/KRW pair rose 0.4% after tumbling 1.8% overnight, remaining near a one-year low. The Australian dollar's AUD/USD pair held steady on Thursday after rising 0.5% in the prior session.
Fed minutes and oil prices add caution
Meanwhile, the Indian rupee's USD/INR pair edged down after five consecutive sessions of gains, with the dollar's three-month low providing relief after the currency had faced pressure from higher oil prices and elevated U.S. yields. It has remained under pressure despite reported intervention from the Reserve Bank of India across spot, futures and offshore markets.
Investors also weighed shifting expectations for U.S. monetary policy. Minutes from the Federal Reserve's July meeting showed officials remained concerned about inflation, with some policymakers open to further rate increases if price pressures remained above target. Oil prices remained another source of caution, as global crude prices climbed back toward $92 a barrel amid fading hopes for a near-term resolution to the U.S.-Iran conflict.
Source: Investing.com
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