Dollar Eases From 18-Month High as Treasury Yields Fall; Fed Hike Bets Ease
- On Thursday, the dollar slipped from an 18-month peak as cautious remarks from Federal Reserve officials and a pullback in Treasury yields led traders to scale back expectations of an October rate hike.
- Labor Department data showed the core CPI up 0.3% in September versus expectations of 0.2%, while the headline rate rose 3.7%, pushing the dollar to an 18-month high on Wednesday before the reversal.
- San Francisco Federal Reserve Bank President Mary Daly and Vice Chair and Supervision Michelle Bowman said the Fed can wait for a clearer picture, effectively cooling market pricing for an October Fed rate hike from 50%.
- Treasury yields retreated after the initial jump, dragging the dollar lower. Sim Moh Siong, FX strategist at OCBC, wrote, "The USD rally lacked punch as the retreat in Treasury yields after an initial jump softened the rates impulse."
- Focus now shifts to US producer price and retail sales data later in the day, with reports expected to show a jump in business costs last month as market participants weigh the Federal Reserve's next move.
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The dollar declined as treasury bonds declined, leading to a weekly loss, while the euro continued to recover from the lowest level in 17 months, amid anticipation of American interest decisions and strong gains for Indian rupees this week.
Dollar eases from 18-month high as Treasury yields fall; Fed hike bets ease
LONDON, Oct 15 : The dollar slipped from an 18-month peak on Thursday as a sharp drop in Treasury yields weighed on the greenback, while cautious remarks from Federal Reserve officials tempered October hike expectations despite hot inflation data. The dollar index, which measures the US currency against a ba
Today, Thursday, the dollar has fallen below its highest level in 18 months, with markets reducing their expectations of rising US interest rates during the current month, despite higher than expected inflation.
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