The dollar retreated from its highest level in 10 weeks

Aug 22

The dollar fell from its highest level in ten weeks against a basket of major currencies, on Tuesday, despite the Treasury yields recording new highs since the post-financial crisis, and at a time when dealers are awaiting a word that may be of great importance to the Chairman of the Federal Reserve (the US Central Bank). Jerome Powell, later this week.

The yen moved away from its lowest levels in 9 months after the Governor of the Bank of Japan (the central bank) met with the Prime Minister, although he said that the meeting did not address exchange rate fluctuations. The Chinese Yuan briefly rose to a one-week high, after China’s central bank again tried to boost the currency by setting a much higher-than-expected daily midpoint, but those gains quickly faded.

The dollar index, which measures the performance of the US currency against six other major currencies, including the yen and the euro, fell 0.14% to 103.18, but it was not far from its highest level since June 12, which it recorded on Friday at 103.68.

“If Federal Reserve Chairman Jerome Powell leaves the door open for further rate hikes,” Richard Farnulovic, a currency strategist at Westpac, said in a note, in his speech, Friday, to the annual forum of central bankers in Jackson Hole, Wyoming. A new rising front for the dollar could form, and the dollar index may exceed the 104 level.

The benchmark 10-year US Treasury bond yield reached its highest level since November 2007 at 4.366%, with the view that US interest rates will remain high for a longer period of time entrenched in the minds of market participants.

The dollar fell 0.22% against the Japanese currency, recording 145.935 yen. Traders fear central bank intervention after the yen’s fall to a level close to 146 per dollar led to the first yen purchases by Japanese officials in a generation last September.

The euro rose 0.15% to $1.0912, while the British pound rose 0.16% to $1.27765. The yuan was little changed in offshore trading at 7.2934 per dollar, after rising 0.25% earlier. The Australian dollar was unchanged at $0.6417. (Reuters)