Dollar tracks Treasury yields lower as Fed stays on hold

economictimes.indiatimes.com:

Treasury yields as markets grew more convinced the Federal Reserve was done with its aggressive monetary policy tightening cycle after it left rates unchanged.

The Fed on Wednesday held interest rates steady as widely expected, as policymakers struggled to determine whether financial conditions may be sufficiently tight to control inflation.

However, Fed Chair Jerome Powell acknowledged that a recent market-driven rise in Treasury bond yields, home mortgage rates and other financing costs could have their own impact on the economy as long as they persist.

The decision lifted sentiment in Wall Street, which spilled over into the Asia day, giving a small boost to the risk-sensitive Australian and New Zealand dollars.

The Aussie rose 0.5% to a three-week high of $0.6426, while the kiwi similarly jumped more than 0.5% to hit a two-week top of $0.58825.

The dollar edged broadly lower alongside U.S. Treasury yields which touched multi-week lows in early Asia trade.

[US/]

«It seems to us that the FOMC is now in hold mode, albeit in a hawkish way, rather than simply on pause,» said Wells Fargo chief economist Jay Bryson. «That is, we think the bar to further rate increases is higher now than it was a few months ago.»

The two-year U.S.

Treasury yield, which typically reflects near-term interest rate expectations, slid to a nearly two-month low of 4.9250% on Thursday, while the benchmark 10-year yield fell to an over two-week low of 4.7070%.

Against the dollar, the euro rose 0.18% to $1.0589.

The U.S. dollar index fell 0.11% to 106.34.

Traders also drew further conviction that U.S.

rates could have peaked after data showed U.S. manufacturing contracted sharply in October, though separate data pointed to a still-resilient