Dollar Weakens as Treasury Yields Fall Sharply

The US dollar weakened on Thursday (Oct. 15), pulling away from an 18-month high as a sharp decline in US Treasury yields reduced the appeal of the Greenback. The US Dollar Index (DXY) fell around 0.44% to the 102.00 area, while the euro and British pound strengthened against the dollar.

The decline came despite US economic data showing that inflationary pressures remain elevated. The Producer Price Index (PPI) for September jumped 1.3% month-on-month, marking its strongest increase in roughly four and a half years, while retail sales rose 0.8%. Higher energy prices were among the main drivers of stronger producer costs and consumer spending.

However, the data was not enough to convince markets that the Federal Reserve would immediately raise interest rates at its October 27–28 meeting. Traders currently see around a 72% chance that the Fed will keep rates unchanged after several policymakers signaled that further tightening does not need to be rushed.

Pressure on the dollar intensified as investors moved into US government bonds amid a selloff in technology stocks and growing concerns over heavy financing linked to artificial intelligence projects. Stronger demand for Treasuries pushed bond prices higher and sent the 10-year yield to its lowest level in around three weeks.

Market attention now turns to remarks from Fed Chair Kevin Warsh at the IMF and World Bank meetings in Bangkok. Any comments on inflation and the future interest-rate path could become a key catalyst for the dollar. A more hawkish tone could lift the DXY and Treasury yields again, while a more cautious stance may extend the dollar’s correction.(mrv)

Source : Newsmaker.id