Dollar falters as Treasury yields retreat amid recession risks, rate hike

Treasury 10-year yields slid more than 1 basis point in Tokyo, trading to around 3.17% as Asian equities followed Wall Street lower

us dollar
Photo: Bloomberg
Reuters Tokyo
2 min read Last Updated : Jun 29 2022 | 9:12 AM IST

The dollar slipped against most major peers on Wednesday as a decline in U.S. yields took some of the sheen off the currency, with investors mulling the risk of a recession from aggressive Federal Reserve rate hikes.

The dollar index, which measures the greenback against six counterparts, eased 0.08% to 104.39, giving back some of its 0.53% rally overnight, spurred mainly by weakness in the euro.

Treasury 10-year yields slid more than 1 basis point in Tokyo, trading to around 3.17% as Asian equities followed Wall Street lower. U.S. shares fell after a steep drop in U.S. consumer confidence stoked worries about a slowdown as the Fed rushes to get inflation in check.

The euro rose 0.11% to $1.05315 after dipping to $1.05025 on Tuesday, after European Central Bank (ECB) chief Christine Lagarde offered no fresh insight on the path for European interest rates at the ECB's annual forum.

The ECB is widely expected to follow its global peers by raising interest rates in July for the first time in a decade to try to cool soaring inflation, though economists are divided on the magnitude of any hike.

Lagarde and Fed Chair Jerome Powell will speak on a panel at the forum later on Wednesday.

"Recession risk will periodically undercut DXY (but) the broader medium-term uptrend likely persists a while yet," Westpac strategists wrote in a client note, referring to the dollar index, which they see sticking to a range of 101 to 105 for now.

They added: "... the DXY is unlikely to peak until we are closer to the end of the Fed's front-loaded tightening cycle."

The dollar slipped 0.08% to 136.04 yen, while sterling rose 0.16% to $1.2204.

Despite the decline in equities, the risk-sensitive Australian and New Zealand dollars staged small rebounds from Tuesday's declines against the greenback, with the Aussie up 0.07% and the New Zealand dollar rising 0.18%.

 

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

More From This Section

Topics :US DollarUS economyDollar

First Published: Jun 29 2022 | 9:12 AM IST

Next Story