Dollar hugs three-month lows as Treasury seeks to sooth the bond market

According to Business Recorder, the US dollar slipped on Thursday and hovered close to its lowest point since mid-May, with the dollar index at 98.938. Investors were weighing a Treasury move to double buyback operations for longer-dated bonds, a step meant to calm a sharp sell-off that had driven the 30-year yield up to 5.337%, the highest reading in 19 years. The yield later eased to 5.184%, a fall of 9 basis points after Wednesday's announcement.

The euro was quoted at $1.1676, its strongest level since late May, while sterling stood at $1.3603. The Japanese yen traded at 158.32 per dollar, moving away from the 160 mark after surrendering much of the gains from a joint intervention at the end of July. Swiss francs bought 0.7981 per dollar, close to a two-month high.

IG's Tony Sycamore said the Treasury was pulling longer-dated bonds out of the market while issuing more short-term bills, which pushes long-term yields lower without any Federal Reserve balance sheet growth. He added that Washington appears ready to counter rising term premia, although the step is not formal quantitative easing. Minutes from the Fed's meeting last month showed several policymakers ready to raise rates if inflation fails to ease toward the 2% target.