"" The US dollar has hit three-month lows, hovering near $98.94, as investors digest the Treasury Department's measures to calm the bond market. The euro has reached its highest level since late May, trading at $1.1676.
The Treasury Department has announced plans to double liquidity support buyback operations for longer-dated bonds, which has pushed the 30-year Treasury yield to a 19-year high of 5.337%. However, the yield has since dropped to 5.184% following the announcement.
According to Tony Sycamore, market analyst at IG, the Treasury's move is not formal quantitative easing, but rather a signal that Washington is prepared to lean against rising term premia. Brian Jacobsen, chief economic strategist at Annex Wealth Management, views the move as a temporary salve, but notes that the Treasury is effectively pumping more money-like short-term debt into the economy.
The Fed's meeting last month showed concern about inflation, with several policymakers ready to raise interest rates and many saying a hike in borrowing costs would be needed if inflation does not decline to the US central bank's 2% target. The Japanese yen has pulled away from its joint intervention gains, trading at 158.32 per dollar, while sterling and the Swiss franc have also strengthened, trading at $1.3603 and 0.7981 per dollar, respectively.
