Dollar drops with US yields, euro buoyed as ECB trims emergency support
The dollar dipped on Thursday as Treasury yields fell after the U.S. government saw strong demand for a sale of 30-year bonds, while the euro was supported after the European Central Bank said it would trim emergency bond purchases over the coming quarter.
The dollar index dropped 0.23% to 92.47, up from a one-month low of 91.94 on Friday.
Investors are focused on when the Federal Reserve is likely to begin paring bond purchases as it balances rising price pressures against a still relatively soft employment picture.
Chicago Federal Reserve President Charles Evans on Thursday said the U.S. economy is “not out of the woods yet,” and that despite strong economic growth and the promise of vaccines, challenges remain, including supply chain and labor market bottlenecks.
Fed Governor Michelle Bowman, meanwhile, added her voice to the growing number of policymakers who say the weak August jobs report likely won’t throw off the central bank’s plan to trim its $120 billion in monthly bond purchases later this year.
The euro was also supported after the ECB maintained a dovish tone and offered no major surprises as it took a first small step toward unwinding the emergency aid that has propped up the euro zone economy during the pandemic.
The euro gained 0.11% on the day to $1.1828.
Bitcoin edged higher it attempted to recover from a large and sudden price drop on Tuesday.
The cryptocurrency gained 1.28% to $46,680.
TREASURIES-U.S. yields fall after 30-year auction
Longer-dated U.S. Treasury yields moved lower on Thursday after a strong auction for 30-year Treasury bonds closed out $120 billion in coupon-bearing supply this week.
A $24 billion 30-year bond auction was strong, analysts said, and yields on both the benchmark 10-year and 30-year hit session lows following its completion.
The yield on 10-year Treasury notes was down 4.3 basis points at 1.297%, after hitting a daily low of 1.287%, its lowest since Sept. 3.
The yield on the 30-year Treasury bond was down 5.4 basis points at 1.898% after falling to 1.885%, its lowest since Aug. 31.
Reference: Reuters
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