Precise Investors Editorial Team
The U.S. dollar index was down 0.1% to 99.60
The U.S. dollar on Wednesday inched lower after catching a safe haven bid in the previous session, amid a let up in surging oil prices and Treasury yields. The Canadian and New Zealand currencies grabbed some attention after interest rate decisions in the respective countries, while the yen firmed on intervention hopes.
At 19:59 GMT, the U.S. dollar index was down 0.1% to 99.60. The gauge had jumped 0.3% on Tuesday.
A relentless rout in sovereign debt eased up on Wednesday, prompting traders to move back into equities.
On Tuesday, U.S. Treasury yields hit multi-year highs. The benchmark U.S. 10-year yield hit its highest level since November 2023, while the 2-year yield hit its highest since July 2024.
The selling has been driven by jitters about inflation amid higher oil prices, fears about unsustainable debt issuance by companies to fund their AI infrastructure buildouts, and ballooning fiscal debt. Rising yields drive up borrowing costs, which in turn can weigh on consumers and businesses. Higher rate environments also tend to boost the dollar.
The U.S. Treasury yield curve stabilized on Wednesday, with the 10-year yield last down 1.2 basis point to 4.784%, and the 2-year down 2.1 basis points to 4.373%.
Interest rate watchers also received data on the U.S. economy and labour market, ahead of Friday’s closely-watched nonfarm payrolls report for August.
Elsewhere, oil prices rose, but the gain was not as sharp as that on Tuesday. Brent crude futures expiring in November, the international benchmark, were last up 0.6% to $95.26 a barrel, after a 4.6% climb the previous day.
Turning to other currencies, the Canadian dollar added 0.4% on Wednesday. Earlier, the Bank of Canada (BoC) held its key overnight rate steady, but warned that risks to inflation had increased.
The New Zealand dollar was another notable mover, dropping over 0.7% against and on track for its worst day since June 23.
The move came after the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision, where policymakers delivered a 25-basis-point rate hike but paired the move with unexpectedly dovish forward guidance.
RBNZ officials adopted deliberate ambiguity regarding future tightening, signalling that an October rate increase is far from guaranteed and emphasizing data-dependent flexibility.
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