Greenback eases from 18-month high as US Treasury yields fall; Fed hike bets ease
A rally in US government bonds pushed the benchmark 10-year yield to 5.085%
The US dollar weakened from an 18-month high on Thursday as US Treasury yields declined, while cautious comments from Federal Reserve officials reduced expectations of a rate hike in October, despite strong inflation data. The dollar index fell 0.2% to 102.03, after hitting an 18-month high on Wednesday. This led to gains in the euro and sterling, while markets became more cautious and trading was choppy.
Strong US inflation data initially fueled bets on higher-for-longer Fed rates, but concerns about AI companies' debt burdens revived safe-haven flows into Treasuries. The 10-year yield reached 5.085% and the 30-year yield fell to 5.428%, both near three-week lows. Market analyst Kit Juckes noted that the dollar's movements were a result of a tug of war between the market's desire for a correction and the large positioning of bets for higher rates.
Both retail sales and producer price index data, due later in the day, could influence the dollar's direction.
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