The U.S. dollar weakened on Wednesday, hovering near its lowest value in several months against a basket of major currencies. The move came as Treasury yields retreated from recent peaks, and traders prepared for the release of the Federal Reserve’s minutes from its latest policy meeting.
Currency moves
The euro edged higher to $1.1577, staying near a two‑month high reached earlier in the week. The British pound was largely unchanged at $1.3533, holding close to a three‑month high ahead of the United Kingdom’s inflation report due later on Wednesday, which analysts expect to show continued price pressure. The Japanese yen remained steady at 159.56 per dollar after giving back much of the gain it had earned from recent intervention, though it stays well above the multi‑decade low of about 164.
Dollar index and Treasury yields
The dollar index, which tracks the greenback against six major peers, slipped marginally to 99.65. A pause in the sell‑off of U.S. Treasuries was evident, with the benchmark 10‑year Treasury yield falling to 4.702% and the 30‑year yield dropping to 5.282%.
Alpine Macro’s chief global fixed‑income and currency strategist Harvinder Kalirai told clients that if the Fed does not resume the rate hikes currently being discounted, “the upside for bond yields should be very limited here.” He added that a softening labor market and easing inflation typically narrow the dollar’s yield advantage, which in turn can lead to a softer greenback.
Market backdrop
Recent data have hinted at a cooling U.S. economy, including unexpected job losses in July and modest inflation readings. Those signals have prompted investors to scale back expectations for further rate hikes.
In the commodities arena, a stalemate in the Middle East lifted oil prices to near three‑week highs, keeping inflation concerns alive. President Donald Trump said there were no ongoing talks with Iran and affirmed that the Strait of Hormuz remained open, contradicting Iranian claims that the waterway was closed to shipping.
Other currencies
The New Zealand dollar and the Australian dollar were largely unchanged, trading at $0.5874 and $0.7083 respectively.
All eyes now turn to the Federal Reserve’s release of the meeting minutes later today. Market participants will be looking for any indication of how policymakers view the trajectory of interest rates, especially in light of the mixed economic data and the recent easing of Treasury yields.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
